Published on May 31, 2022Updated on Oct 7, 2026
Many times, our requirements of funds are spread over time and we have to borrow the funds all at once and start paying the interest cost, whether the funds are utilized or not. Such a situation is not desirable for any borrower as it increases the cost of borrowing and unnecessarily increases the EMI amount.
Therefore, in such a case, you may consider availing a line-based personal loan, which works similar to credit cards and offers much flexibility to users.
Let’s understand the concept of a line-based personal loan, which is also known as a personal line of credit.
A personal line of credit works like a credit card, where the lender based on your eligibility approves a personal loan limit for a fixed tenure. You can avail of funds as and when required and pay interest charges only on the amount utilized from the approved loan limit, not on the entire loan amount.
Compared to a personal loan, the borrower needs to have a high credit score and stable income source to avail of a line-based personal loan. Also, the repayments depend on the amount withdrawn from the personal line of credit. There is no fixed repayment amount to repay the loan amount withdrawn. Furthermore, the borrower needs to ensure the loan amount is entirely repaid before completing the loan tenure. At the moment, this product is not available in SMFG India Credit.
Must Read: A Complete Guide of Personal Loan Glossary & Terminology
A personal line of credit is an unsecured form of loan, where the loan limit is decided by the lender based on the eligibility of the borrower.
Once the loan is approved, you can borrow an amount equal to or less than your credit limit at once or at intervals, subject to repayment of the utilized amount. Usually, there is no limit set on the number of withdrawals as long as the sum is within the authorized limit.
You can spend the amount for any purpose and there is no spending restriction. Once you have availed of the loan, the loan repayment starts as per the agreed terms from the next month. With each EMI paid, the limit is restored to the extent principal is repaid. If you need, you can borrow the amount once again, but you have to ensure the loan is repaid before the loan tenure ends.
Must Read: How To Choose The Best Personal Loan For You?
The process of getting a line-based personal loan is similar to applying for a personal loan. You need to meet all the eligibility criteria prescribed by the lender to be eligible for the loan. Based on your financial status, income status, and loan eligibility, your personal loan interest rate is determined by the lender. Please note that at this moment, this product is not offered by SMFG India Credit.
The personal loan documentation includes:
You can use the personal loan EMI calculator to calculate the repayments, which will help you plan your borrowing and systematically reduce your interest cost. To calculate interest cost accurately, you need to calculate interest daily, and not on a monthly basis. Moreover, this product is more suited to individuals who realize they may have a need for funds but are not sure when they would need the money, or how much. A lot of people who signed up for this product without actually needing it have ended up in deep debt, because like credit cards, this product gives one a false sense of security, and may encourage irresponsible financial behavior.
If you are looking for a personal loan at a highly competitive rate of interest, and you know exactly how much you need, you can apply for a traditional personal loan with SMFG India Credit. Depending on your eligibility, you may be able to get up to INR 10 Lakhs* at attractive interest rates starting from 12.5% per annum and flexible repayment tenures between 12 and 60 months.
Important Note: This article is for general informational purposes only and may be subject to change from time to time. As product features, eligibility criteria, interest rates, charges, fees, tenures and other terms may be revised as per SMFG India Credit's policies, readers are advised to refer to the latest details from the respective product pages (please select from the top menu). For the latest loan charges, please visit Charges & Fees Link and for the latest Interest rates, please visit Interest Rate Rationale. Please note that final loan terms, disbursement process and eligibility criteria will depend on SMFG India Credit's policies at the time of loan application.
The content of this article is for information purposes only and does not constitute as, an offer or advise to avail any products or services from, or, a commitment to grant any loan by the company. It is not intended to create any rights or obligations against us. All content is provided "as is" without any warranty of any kind, either express or implied & we disclaim any warranty or representation, whatsoever, in regards to the content. Please refer to the Privacy Policy of the company to understand the use, processing and storage of your personal data.
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