Open end credit is a credit facility that a financial institution provides to a borrower on a revolving basis. A credit card is an example of open end credit in which the borrower is permitted to use the credit facility within a certain limit for example $500 a month that has to be repaid to the bank before it is due.
Another example of open end credit is a home equity loan. A home equity loan is restricted up to the amount of equity in the mortgaged home. Assume a borrower has a 30% equity in a home with an appraised value of $100000, he might be eligible to get a home equity loan of up to $30,000.
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