Credit Card Bank

Posts Tagged ‘Emergency Fund’

When it comes to purchasing that shiny new car, you might be confused as to whether you should pay cash or finance it. With all the talk about personal finance these days, most people are either on one side of the fence or the other. You have one group of people who pay cash for everything and don’t believe in having any debt at all. Then there is another group of people who finance all kinds of stuff with the intention of paying everything off quickly. There are pros and cons to each approach that we will discuss below.

Perks of using Cash

When you pay cash, you get the perk of not having a monthly car payment to deal with. The feeling of not having to scratch out a check each month to pay for your car is a great one. Plus, if you run into any kind of financial, job-related or medical issues, you don’t have the worry of paying your car payment each month. When you pay cash, you also eliminate the need to pay finance charges and interest each month.

A business line of credit gives a business owner available cash anytime they run short of funds. It can be used to purchase inventory, supplies, pay bills, meet payroll and as a general emergency fund.

A business line of credit is not a loan. It’s more of a “loan in waiting” as you only use it when you need it. The aspect that makes it better than a loan in the eyes of many business owners is that you do not have to pay interest on the money until you actually start dipping into the credit line. Plus, you only pay interest on the portion you actually use. It’s sort of like a financial safety blanket that keeps you from having to use higher interest vehicles such as business credit cards to meet your financial obligations.

The first place most businesses go to get a business line of credit is at the bank or credit union they use for their company checking, savings and investments. Simply ask to see a manager at the bank. Timing is important though. You may want to ask about it when your bank account has some measurable assets along with consistent deposits. This proves your company is making money and is financially sound. If you are a new company with little assets, be prepared to show your business plan to the bank before getting a business line of credit approved.