We live in a complex world and hence, it can be said that unexpected expenses can pop up out of nowhere. You never know when your car breaks down, or you have a medical emergency. If you have nothing to support you financially in these situations, it could be a disaster for you. However, in these situations, having a safety net can be a lifesaver.
One way to create a financial safety net is by having access to a Pre-Approved CASHe Limit. Here, in this article, we will understand more about Pre-Approved CASHe Limit, importance of emergency funds, and how you can use it responsibly to avoid getting into financial trouble.
What is a Pre-Approved CASHe Limit?
A Pre-Approved CASHe Limit, also known as a line of credit, is a type of loan that allows you to borrow money up to a certain limit. It is a different process from a traditional loan where you receive a lump sum upfront. With a Pre-Approved CASHe Limit, you can borrow as much or as little as you need up to the maximum limit provided by the lender.
How Does a Pre-Approved CASHe Limit Work?
Let’s understand it this way – suppose you have a Pre-Approved CASHe Limit of ₹5 lakh. This would mean you can always borrow money up to ₹5 lakh from your lender. However, you do not have to borrow the full amount in one go. You can borrow in parts as and whenever needed, whether for car repairs, hospital bills, etc. You can borrow whatever you need and leave the rest of the Pre-Approved CASHe Limit untouched. You would now only pay interest on the amount you borrow, not the entire credit limit.
How You Can Use a Pre-Approved CASHe Limit as a Safety Net?
Now let’s discuss how Pre-Approved CASHe Limits serve as emergency fund solutions.
Imagine you are in a medical emergency, got admitted in a hospital, and later on, get hit with an unexpected medical bill of ₹3 lakh. If you do not have enough savings to cover it, it can be a problem for you. But you can always tap into your Pre-Approved CASHe Limit if you have one. Now if you have a ₹5 lakh Pre-Approved CASHe Limit, you can easily borrow ₹3 lakh that you need to pay the bill. This can provide you with peace of mind knowing you have financial support to fall back on.
Benefits of Using a Pre-Approved CASHe Limit
Pre-Approved CASHe Limit serves as a financial safety net, as mentioned above. But below are the benefits that would help you understand it’s importance:
Quick Access to Funds
In emergencies, time is of great value and with a Pre-Approved CASHe Limit, you can access funds quickly, often within a few business days, compared to other forms of borrowing that may take longer to process.
Flexibility
Unlike a traditional loan with fixed monthly payments, a Pre-Approved CASHe Limit offers flexibility in repayment. You can choose to pay back the borrowed amount in full or make minimum payments, depending on your financial situation.
Cost-Effective
As in a Pre-Approved CASHe Limit you only pay interest on the amount you borrow, it is certainly a cost-effective option if you wish to manage short-term financial needs. Moreover, the interest rates on Pre-Approved CASHe Limits are often lower than those on credit cards.
Builds Credit
When you resort to the responsible use of a Pre-Approved CASHe Limit, you can help build your credit history and improve your credit score over time. This would eventually make it easier for you to qualify for loans and credit cards with better terms in the future. Isn’t that what you look forward to?
Also Read: When Should You Use a Pre-Approved CASHe Limit?
Tips to Use Pre-Approved CASHe Limit Responsibly
There is no doubt that a Pre-Approved CASHe Limit can serve as your financial backup plan in emergencies, it is important for everyone to use it responsibly. Here are some tips for you:
- Always borrow only what you need. Just because you have access to a certain amount of credit does not mean you should borrow all of it.
- Do have a repayment plan. Calculate how much you would need to pay back each month and make sure it fits within your budget.
- Ensure to avoid using a Pre-Approved CASHe Limit for non-essential expenses. Always reserve your Pre-Approved CASHe Limit for true emergencies such as medical bills or car repairs.
- Always monitor your spending and keep track of how much you borrow from your Pre-Approved CASHe Limit and how quickly you repay it. Avoid falling into the trap of borrowing more than you can afford to pay back.
