{"id":745351,"date":"2018-08-22T20:57:24","date_gmt":"2018-08-23T00:57:24","guid":{"rendered":"https:\/\/www.finder.com\/ca\/?p=745351"},"modified":"2025-05-23T11:25:07","modified_gmt":"2025-05-23T15:25:07","slug":"personal-loan-vs-line-of-credit","status":"publish","type":"post","link":"https:\/\/www.finder.com\/ca\/personal-loans\/personal-loan-vs-line-of-credit","title":{"rendered":"Personal loan vs line of credit"},"content":{"rendered":"

A personal loan and a line of credit can both provide the money you need to pay for big purchases. But the way you access the money, and how and when you repay it, is different for each option. Keep reading for a side-by-side personal loan vs. line of credit comparison to help you decide which is right for you.<\/p>

Quick summary: personal loan vs. line of credit<\/h3>
<\/th>Personal loan<\/th>Line of credit<\/th><\/tr><\/thead>
How you get the money<\/strong><\/div><\/td>
Lump sum upfront<\/td>Withdraw funds when needed (up to your credit limit)<\/td><\/tr>
Loan term<\/strong><\/div><\/td>
Typically 1\u2013\u20607 years<\/td>Ongoing<\/td><\/tr>
Interest rate<\/strong><\/div><\/td>
Can be fixed or variable<\/td>Usually variable<\/td><\/tr>
Repayments<\/strong><\/div><\/td>
Regular monthly payment<\/td>Monthly payment varies depending on the amount you withdraw<\/td><\/tr>
Pros<\/strong><\/div><\/td>
  • Fixed repayment schedule<\/li>
  • Competitive rates if you have strong credit<\/li>
  • Use funds for any legitimate purpose<\/li><\/ul><\/td>
  • Lower interest rate than a credit card (if you have good credit)<\/li>
  • Flexible access to funds<\/li>
  • Only pay interest on the money you use<\/li><\/ul><\/td><\/tr>
Cons<\/strong><\/div><\/td>
  • High rates for bad credit<\/li>
  • You pay interest on the entire loan amount<\/li>
  • Loan origination fee might apply<\/li><\/ul><\/td>
  • Risk of overspending<\/li>
  • Interest rates could rise and increase your repayment amount<\/li>
  • Traditional lenders have strict eligibility criteria<\/li><\/ul><\/td><\/tr>
Good for<\/strong><\/div><\/td>
Large purchases when you know exactly how much money you require<\/td>Ongoing expenses when you\u2019re not sure of the total amount you need<\/td><\/tr>
<\/td>Personal loans<\/a><\/td>Lines of credit<\/a><\/td><\/tr><\/tbody><\/table>