business LOC question - Posted by Chad (MD)

Posted by Rich-CA on December 06, 2007 at 17:14:42:

Its always better to park cash in debt payoff as you will usually save more interest than an interest bearing account would and you can always draw on the LOC at need.

business LOC question - Posted by Chad (MD)

Posted by Chad (MD) on December 05, 2007 at 13:21:35:

Hi all,

I’m working on several rehabs at the same time, and here is something I don’t understand regarding business lines of credit: Is it cheaper to pay of a LOC when I get cash from a new loan, then start using the LOC again? Or is it better to use the cash to pay for new expenses directly and leave the balance on the LOC?

For example: I have a $15k balance on the LOC, then I get cash back on a refi for the same amount. Should I pay off the LOC and start using it again on the next rehab, or should I use the $15k cash directly?

If I don’t pay the balance on the LOC there will be monthly finance charges, but there are also fees to write checks on the LOC, so I was wondering which way is best.

I know someone will say it depends and to look at the loan info, but this situation is new to me, and I would at least like to be pointed in the right direction.

Thanks in advance,