Personal Line of Credit vs. Personal Loan

Credit card being held, personal line of credit vs. personal loan

When a consumer’s vehicle breaks down, their house needs a costly repair, or other unforeseen expenses arise, they might not have the funds to cover the costs. A personal loan or line of credit can help them make ends meet.

There are many loan options available and trying to decide on which one is right for you can be overwhelming. Consumers should educate themselves on the differences between loan options to make the best choice.

What Is a Personal Loan?

A personal loan refers to the money a consumer borrows from a financial institution.

When Would Someone Get a Personal Loan?

When a consumer gets a personal loan, they typically receive the funds in one lump sum. Most personal loans are unsecured, which means the consumer is not required to put up collateral to be approved for the loan. Some, however, may be secured loans. Some examples of secured personal loans are mortgages and vehicle loans.

Benefits of a Personal Loan

Personal loans can be helpful to consumers. Three benefits of choosing a personal loan are: The money from a personal loan can be delivered quickly. Borrowers can often be approved and receive the funds by the following business day*.

Interest rates are usually fixed. While there are some variable interest rate personal loans (for example, some mortgages have variable rates) most of them are fixed. This helps the borrower budget, knowing that every payment will be the same until the debt is paid off.

No collateral needed. Most personal loans are unsecured. If the borrower does not pay off the loan, they will not have their assets seized like they could with a secured loan.

What Is a Line of Credit?

A line of credit is a set amount of money made available to a consumer by a lender. Lines of credit can be either unsecured or secured by a piece of collateral. A home equity line of credit (HELOC) is an example of a secured line of credit. When a person has an open line of credit, they can withdraw funds at their discretion from their available balance.

How to Get a Line of Credit?

Consumers interested in a line of credit should visit their financial institution and complete an application. Getting approved for a credit line may take a few minutes to several days, depending on the lender's underwriting process.

Benefits of a Line of Credit

Two of the most valuable benefits a line of credit offers are:

Flexibility. The borrower has access to funds when they need it and can draw from the line of credit, up to the credit limit.

Convenience. Having access to the funds to pay for expenses and other life events gives a consumer security and peace of mind.

How Are Personal Loans and Lines of Credit Different?

While lines of credit and personal loans are similar, the main difference is the way in which the consumer receives the money. Lenders deliver a personal loan to the borrower in a single lump sum, whereas a borrower can take advances from a line of credit up to their limit.


Is a Line of Credit Considered a Loan?

A personal line of credit is designed to be a flexible loan type where your funds can be borrowed up to the credit limit and paid back over time.

Can I Use my Line of Credit to Pay Bills?

Using a line of credit to pay bills is a common occurrence today.

Apply Through Integra Credit For Your Next Personal Loan or Line of Credit

Understanding how personal loans and a line of credit work help consumers choose the best option. Integra Credit offers a seamless application process. Apply today.

Recent Posts

Your Guide to Common Bank Account Types

Anyone with good sense knows that it’s wise to keep your money in a bank account. Whether for the security of your funds, the convenience, or the interest-earning potential, bank accounts offer many benefits.

However, it’s not quite so simple as just waltzing up to your local branch and depositing your money. There are several different types of bank accounts available to you, all of which serve different purposes. In this article, we’ll break down four types of bank accounts, and explore which one might be right for you.

Read More >
What Is an Unsecured Loan?

Many loans are tied to an asset you own. That’s often ideal when you need money to purchase a specific asset such as a home or car. But what about when you need money for a variety of uses or for something intangible like your education? In that case, you may want to consider an unsecured loan.

What is an unsecured loan? Unlike secured loans, which rely on a specific asset as collateral, unsecured loans are not collateralized by your property. Instead, they rely on factors such as your credit score and income.

Unsecured loans can be helpful for a variety of things — from tuition expenses to consolidating debt — but they are not for everyone or all situations. Let’s explore more about how these loans work, what types of options you’ll find, and how to know when they’re right for you.

Read More >
How to Save Money Despite Living Paycheck to Paycheck

Living paycheck to paycheck can be frustrating as you watch money go out as soon as your paycheck comes in. You're staying on top of bills and working hard but need help to look forward to a time when you can put money away.

An inability to save puts people in a tough spot when an emergency occurs. A surprise car repair or medical bill could become very problematic.

61% of Americans were living paycheck to paycheck in June 2022, up 9% from an April 2021 low of 52%, making paycheck to paycheck living the most common financial lifestyle in the US. Some simple money management tips can bring you out of the paycheck to paycheck grind, put some cash away, and be prepared for when emergencies might come your way. You've got this.

Read More >

Apply Quickly & Securely

Apply Quickly
& Securely

Fast, short and
secure application
Virtually instant
approval decision
Choose how much
cash you need
Money in your account
as early as tomorrow*