Personal Loan vs Line of Credit

Written by True Tamplin, BSc, CEPF®

Reviewed by Editorial Team

Updated on March 05, 2023

Personal loan has some differences versus a line of credit.

For example, lines of credit offer continuous funds, whereas a loan provides a lump sum.

Loans also have fixed interest whereas lines of credit have a variable interest.

Lines of credit are ideal for continuous but uncertain costs, and a loan is ideal for single or known costs.

What’s Easier to Get: Personal Loan or Line of Credit?

Personal loans and personal lines of credit are similarly difficult to get.

Both require a healthy credit score, good credit history, and a certain demonstrable income.

The bigger concern is how they should be used; lines of credit are ideal for continuous but uncertain costs, and a loan is ideal for single or known costs.

Personal Loan

  • Lump sum
  • Fixed interest
  • Regular payments of the same amount
  • Interest charged on whole amount
  • Ideal for single or known expenses

Line of Credit

  • Continuous funds
  • Variable interest
  • Minimum monthly payment
  • Interest charged on money spent
  • Ideal for ongoing but uncertain expenses

Personal Loan vs Line of Credit FAQs

About the Author

True Tamplin, BSc, CEPF®

True Tamplin is a published author, public speaker, CEO of UpDigital, and founder of Finance Strategists.

True is a Certified Educator in Personal Finance (CEPF®), author of The Handy Financial Ratios Guide, a member of the Society for Advancing Business Editing and Writing, contributes to his financial education site, Finance Strategists, and has spoken to various financial communities such as the CFA Institute, as well as university students like his Alma mater, Biola University, where he received a bachelor of science in business and data analytics.

To learn more about True, visit his personal website, view his author profile on Amazon, or check out his speaker profile on the CFA Institute website.

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