LOANS
OPEN ENDED LOANS
FUNCTION
Open end loans are valuable when the full amount of the credit line isn't needed right away, but may be needed at various times in the future. With an open end loan, you take only the amount you currently need, leaving the rest available for future use. As you make payments to the loan, those amounts become available to you again, and you can borrow against them. You're not required to take money until you need it.
FEATURES
Open end loans provide you with more credit as you repay previously borrowed amounts. This eliminates the need to apply for new credit every time you need it. As long as there are funds available, you can borrow against them. Many open end loans require only interest payments, or interest plus a small amount of principal, resulting in lower monthly payments. However, you will still have to pay back the principal amount at some point.