Loan or Line of Credit? Which is Right for You?

Do you have debt you are looking to consolidate? Perhaps there is a larger purchase you would like to make? Regardless of why you might be interested in exploring some of your available credit options, it’s important to know which vehicle is best for you. Some of the more typical avenues you might explore include personal loans or lines of credit.

A personal loan is simply a sum of money that would be loaned out with an interest rate determined by the lender, and regular payments are made by the borrower, on a schedule, until the sum is returned (including the interest). A line of credit acts more like a credit account. You receive a credit limit with an interest rate, which can be accessed at any time. However, payments are made similarly to credit cards, with monthly minimums required and the ability to pay back the debt at any time, or carry the debt for a longer period.

If you are consolidating debt, something like a loan might make more sense as loans have a finish date where the sum is completely paid off. A line of credit has the possibility of becoming another source of regular debt unless purchases are paid off regularly.

It boils down to what you think is right for you, as well as your lender. If you’re interested in finding out more about either a loan or a line of credit, talk to the experts at Access Credit Union. Contact us today.