Would you prefer a line of credit loan or an installment loan? Although they are closely related and share a purpose, these lending services are distinct. To decide which is best for you and your financial needs, take a little time to study the differences. A line of credit vs. a loan: which will fit your schedule? Which satisfies your goals and limitations? Which is readily available to you? When you’re ready to get started, use the information compiled below to explore the devices’ variances and similarities. A line of credit vs. a loan: which is right for you?
Line of Credit vs. a Loan
Before we begin our comparison, let’s examine what each financial device is exactly. A line of credit loan is an open-ended loan that is similar to a credit card in function. Although the borrower may be approved for a large amount, they only need to pay for the funds they use. Installment loans, on the other hand, are one-time sums of money provided to borrowers, who must pay back the lender at fixed intervals. They vary in length and amount from loan to loan.
- Both financial devices are types of loans given from a lender to a borrower.
- Both are typically used by people who need money quickly and/or have bad credit.
- Both vary in duration.
- Both require proof of a steady income and a bank account.
- Both are paid back at regular intervals.
- Both must be paid back with interest.
- Line of credit loans are more flexible than installment loans. They allow the user to decide when they would like to borrow money and how much they would like to borrow (up to the established limit). Installment loans offer a lump sum – no more and no less.
- Line of credit loans are open-ended, while installment loans have an established end date. So if you have a line of credit, you can use it to varying degrees as your situation evolves. Withdraw when you like, repay the money when you like, and repeat as often as you like. If you work with installment loans, you will need to take out a new loan each time that you need a sum of money.
- Line of credit loans have fluctuating interest rates, which move up and down depending on how much money you borrow. An installment loan, on the other hand, will have a fixed interest rate.
Basically, an installment loan is quite predictable as far as loans go: you receive a lump sum, you pay it back at regular intervals, and the loan expires at a specified date or when you repay the loan in its entirety. Line of credit loans, on the other hand, are unique, flexible, and open-ended. The borrower can use all or none of the provided amount, taking and repaying funds as needed.
Whether you would like to apply for a line of credit loan or an installment loan, check out Advance Paycheck Online. We are direct lenders offering short-term advances and online installment loans to the residents of Idaho, New Mexico, and Wisconsin. In addition, we offer line of credit loans to residents of Illinois for up to $1,500. Our flexible payment schedules will help you pay off your loan as soon as possible, and we prorate the fees involved so that if you pay off the loan early, you will have very few fees to pay. To get started, please contact us online or give us a call at 1-815-436-4242. We would be happy to help!