LoanPro offers a loan type called Credit Limit. This is a closed-ended installment loan with the additional component of a lender-specified, maximum dollar-amount limit, that the borrower may access through additional advancements of funds by the lender. If the lender attempts to advance an amount that will cause the loan to exceed the borrower’s Credit Limit, LoanPro will display a warning.
Credit Limit Vs Revolving Line of Credit
A credit limit loan is not what is traditionally thought of as a line of credit. With a line of credit, the loan is open-ended, meaning there is no loan term associated. The borrower can borrow money and pay it back with no specified close date. A Revolving Line-of-Credit typically has a payment amount that includes all due interest and a small component of principal. A Credit-Limit loan can be structured as an interest-only loan with a pre-scheduled balloon payment and/or be fully amortized to bring the loan to a $0 balance.
Issuing a Credit-Limit Loan
When issuing a credit-limit loan, make sure the Loan Type on the Advanced Configuration is set to Credit Limit
Enter the dollar-amount limit on the Setup Terms page.
The credit limit can be more than or equal to the Total Loan Amount. Only the amount the borrower owes, not the credit limit, will accrue interest.