Line Of Credit - LOC
Barron's Banking Dictionary:
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Line of Credit
Commitment by a bank to lend funds to a borrower up to a specified amount over a specified future period. Lines of credit are reviewed annually, and do not require fees or compensating balances unless the line is guaranteed by the lender. Bank lines are considered good until further notice and may be withdrawn at the bank's option. When the borrower is officially notified of the credit available, the line is referred to as an advised line. When the maximum credit is kept internal by the lender, and not disclosed, it is a guidance line. In a commercial line of credit, the borrower is usually required to keep 10% to 20% of the available line in a Compensating Balance. See also Check Credit; Home Equity Credit; Overdraft; Revolving Credit.
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Line Of Credit - LOC
Barron's Real Estate Dictionary:
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Line Of Credit - LOC
An agreement whereby a financial institution promises to lend up to a certain amount without the need to file another application.
See HOME EQUITY LINE OF CREDIT, HOME EQUITY LOAN .
Example: Happy Homes Brokers, Inc., has a line of credit under which they can borrow up to $50,000 at 3% above the prime rate through The Goodmoney National Bank.
See HOME EQUITY LINE OF CREDIT, HOME EQUITY LOAN .
Example: Happy Homes Brokers, Inc., has a line of credit under which they can borrow up to $50,000 at 3% above the prime rate through The Goodmoney National Bank.
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Investopedia Financial Dictionary:
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Line Of Credit - LOC
An arrangement between a financial institution, usually a bank, and a customer that establishes a maximum loan balance that the bank will permit the borrower to maintain. The borrower can draw down on the line of credit at any time, as long as he or she does not exceed the maximum set in the agreement.
Investopedia Says:
The advantage of a line of credit over a regular loan is that interest is not usually charged on the part of the line of credit that is unused, and the borrower can draw on the line of credit at any time that he or she needs to. Depending on the agreement with the financial institution, the line of credit may be classified as a demand loan, which means that any outstanding balance will have to be paid immediately at the financial institution's request.
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Copyrights:
Barron's Banking Dictionary
Dictionary of Banking Terms. Copyright © 2006 by Barron's Educational Series, Inc. All rights reserved.
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Barron's Real Estate Dictionary
Dictionary of Real Estate Terms. Copyright © 2008 by Barron's Educational Series, Inc. All rights reserved.
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