Difference Between Personal Loan and Personal Line of Credit.

By The Exchange Team

Personal loans or credit lines can be helpful if you need money. Both items have pros and cons despite their similarities.

Personal loans

A personal loan gives you a lump sum you can use immediately and repay over time in Fixed Installments.

Personal Credit Line

A Personal line of credit functions like a credit card. During the loan's draw period, you can access cash up to a limit.

In general, both types of debt are unsecured, meaning they are not secured by collateral such as a house or car.

How to Apply for Both.

Both applying for a personal loan and opening a personal line of credit follow a similar application process.

You can prequalify for a personal loan or line of credit with a soft credit pull, but a hard check will be needed later.

Hard credit checks can drop your credit score by five points, but queries for the same sort of loan are counted as one if you browse around quickly.