LOC definition

[WebBoard]

From: Anonymous


We have a line of credit which is called an Access Advantage, with the CTB. We haven't used it for investment purposes however wondered whether this is the same as a LOC.

gunna

 

[Lotana]

Reply: 1
From: Lotana Von Amor


Hello Anonymous (wouldn't it be easier to introduce yourself?),

By definition, LOC does not have a term and therefore there is now fixed minimum amount to pay. This is in contrast with the term loan which is set for a fixed number of years (15, 20, 25 etc). Generally, LOC interest rate is higher because the bank needs more confidence to know that you eventually will repay the loan. Technically, a credit card account is an unsecured LOC.

Regards,

Lotana