Personal Loan vs. Personal Line of Credit: A Complete Comparison

We all need funds to manage various expenses, whether for personal splurges, medical expenses, or weddings. Personal loans and credit lines help us manage those expenses and repay them later. Both of these options are easy and quick to avail. However, there are major differences between the two. Be it the criteria, personal line of credit, and personal loan interest rate. You can find the interest rate using a personal loan EMI calculator. It is important to know the differences between them to choose the option. 

What is a Personal Loan?

A personal loan is a funding that allows you to access a fixed amount at the time of need. Additionally, the personal loan interest rate does not change over time. Thus, making you prepared for a fixed monthly deduction. Using a personal loan EMI calculator, you can find out the interest rate beforehand. This funding is generally a one-time expenditure that allows you to spend the fund on anything. You can avail of this loan from any bank or online lender. Unlike other loans, you do not have to present any collateral in exchange for the grantee fund. This type of loan is ideal for you if you are on a one-off purchase such as – home renovation or repaying other debts.

Pros And Cons Of Personal Loan

Here are some pros and cons of personal loans – 

You get the funding at once.There are loan fees and penalties.
You do not need any collateral to get the loan.There are strict eligibility criterias.
Personal loan interest rate is fixedThere is a fixed repayment timeline

What is a Personal Line Of Credit?

A personal credit line of credit is very much like a credit card. It comes with a credit line limit and an interest rate that can vary. This can be a great option for you if you are planning on a large purchase but are not sure about the scope of the expense. The best thing about this type of fund is that you only have to pay interest for the amount you have used. You can avail it from banks or various other money-landing organizations.  

Pros And Cons Of Personal Line Of Credit

Here are some pros and cons of personal line credit – 

You only pay for the money you have used.The interest rate varies.
Funds are not restricted and can be used for any expenses. The repayment amount fluctuates.
Interest rates are low.There is a potential for overspending. 

Difference Between Personal Loan And Personal Line Of Credit

There are several similarities between a personal loan and a line of credit, but at the same time, they differ from one another in several major categories. 

Approval Process

  • Personal Loan

To apply for a personal loan, you must submit detailed information on your credit history, income, and expenses. After that, the lender will check if you can get the funds you require.

  •  Personal Line Of Credit

The approval process to avail of a personal credit line is fairly simple. The approval process differs from lender to lender. However, there are no such hard-bound criteria. 

Interest Rates

  • Personal Loan

Personal loan interest rates stay the same from the day you apply for it. You pay interest for the amount you asked to be sanctioned. If you are unsure about the interest amount, you can calculate it with a personal loan EMI calculator to find out the exact amount.

  •  Personal Line Of Credit

The interest rate for a line of credit fluctuates. I can be either higher or lower depending on the lender’s policy. The interest rate also depends on the money you have spent from the credited amount. To confirm your interest rate, calculate the amount with a personal loan EMI calculator and be sure of your spending.

Repayment Terms

  • Personal Loan

Personal loans have a fixed repayment period of 12-60 months. This assures you about the repayment period. 

  •  Personal Line Of Credit

Personal lines of credit offer flexibility when it comes to the repayment period. You can repay your debt wherever it is convenient for you and can manage your expenses accordingly. 


  • Personal Loan

Personal loans are harder to access compared to personal lines of credit. You can avail of another one after many hassles once you have repaid the previous personal loan.

  •  Personal Line Of Credit

A personal line of credit is easily accessible. You can reapply for the next one once you have completed it. 


A personal line of credit and a personal loan both do the same thing of allowing people to borrow money in times of need. However, they function differently from the approval process to accessibility. A personal loan gives you a fixed one-time lump-sum amount. On the other hand, a personal line of credit access to the ongoing fund. The main factor you must remember when deciding is the difference between a personal line of credit and a personal loan interest rate. For calculating the same, use a personal loan EMI calculator and be sure about the interest deductions. 

Everyone has a different need; therefore, choose your convenient method of borrowing money to cater to your emergency expenses.