The differences between a Personal Loan and a Line of Credit are simple:
- Personal Loan: You receive all your funds at once
- Personal Line of Credit: You draw available funds as you need them
When to Use a Personal Loan and When to Use a Personal Line of Credit
You can use a Personal Loan and a Line of Credit for many of the same things. In other situations, a loan or line of credit may better fit your needs. A loan can be more effective when consolidating debt, while a line of credit is better suited to managing cash when your monthly income fluctuates.
Take a look at the table below for a side-by-side comparison of loans and lines of credit. Our Credit Matcher can also help you determine whether a loan or line of credit will best meet your needs.
|Personal Line of Credit||Personal Loan|
|Useful for:||Lowering your monthly payments into one low interest rate payment. Provides a way to consolidate high-interest rate balances and manage your bills with one monthly payment.||Paying off high-interest debt with a fixed interest rate and a fixed monthly payment. Provides easy budgeting that can help you pay down your high-interest debt at the end of the term.|
|Access to Funds||Borrow only the funds you need at the time you need them without having to reapply during the term of the line of credit. Access your available credit by check, phone or online.||Receive the entire amount of the loan upfront.|
|Minimum Monthly Payment||$25 or 1% of New Balance shown on your periodic statement, plus the total of all periodic finance charges, insurance, other fees and charges assessed to your account during the periodic billing period, whichever is greater.||Fixed monthly payments of interest and principal.|
|Payment Options||Variable payments based on your outstanding balance. |
Repay principal at any time during the term of the line of credit.
|Fixed monthly payments of interest and principal.
Pay additional principal at any time during the term of the loan.
|Amount You Can Borrow||$3,000 to $100,000.||$3,000 to $100,000|
|Annual Percentage Rate||Variable rate that’s generally lower than loan rates.||Fixed rate and fixed monthly payment.|
|Fee*||$25 annual fee.||There is no loan origination fee.|
|Rate and Payment|
* Subject to application, credit qualification and income verification. The Annual Percentage Rate (APR) may range from 7.00% to 19.75%. The stated range is accurate as of July 31, 2013. Interest rates are variable and subject to change. There is a $25 annual fee.