If you require some flexibility to finance a long-term project, then a line of credit may be the tool you are seeking. Available to individuals and businesses, a line of credit works in a similar fashion to a credit card but typically has lower interest rates and higher credit limits. Why not test yourself by taking this quiz before you decide whether this type of loan is for you.
Question 1 of 15
What is a line of credit?
Question 2 of 15
What is the main advantage of using a line of credit to finance a project versus using a credit card?
Question 3 of 15
What is the difference between a secured and unsecured line of credit?
Question 4 of 15
What is the main advantage of an unsecured line of credit?
Question 5 of 15
What is an advantage of a line of credit over a traditional loan?
Question 6 of 15
How many types of secured lines of credit are available to borrowers?
Question 7 of 15
What is a typical secured personal line of credit that is available to individuals?
Question 8 of 15
What is the set period of time that you may write checks on your HELOC called?
Question 9 of 15
What would be a good reason to set up a personal line of credit?
Question 10 of 15
What are the usual terms for interest calculation on most lines of credit?
Question 11 of 15
What would be the best reason for arranging a HELOC that you only make payments on the interest and do not pay down the loan principal?
Question 12 of 15
What is the usual name applied to a home equity loan?
Question 13 of 15
How does the lender typically require a business to secure a business line of credit loan?
Question 14 of 15
What criteria does a lender use to determine if a business if worthy to receive a business line of credit?
Question 15 of 15