LOC’s as they are commonly referred to are an interest-only product that establishes a total limit which can be accessed at the borrower’s discretion. Favored by investors who like to have a ready-approved source of funds for future investments, interest is charged on the outstanding balance on a daily basis. No structured repayments are usually required so long as the loan balance is less than the limit that has been established.
LOC’s can be used as a transactional account, with your salary and any other deposits being made directly into the loan (thus reducing the balance and thus the interest charged). Funds can then be accessed using a debit card linked to the account.