Should I get a Line of Credit or a Loan?

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  • Written By: Luke Arthur
  • Edited By: C. Wilborn
  • Last Modified Date: 26 January 2020
  • Copyright Protected:
    Conjecture Corporation
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When trying to decide whether you should get a line of credit or a loan, there are several things to consider, such as the interest rate of each. You should also look at your level of self-discipline and try to determine what your individual needs are as well. When deciding between a line of credit or a loan, you need to decide whether you want flexibility or structure. You should also determine how long you need to borrow the money.

Either a line of credit or a loan can provide you with access to money when you need it. While these are both similar products, there are a few key differences. With a loan, you will get a fixed amount of money upfront, and then make regular payments until the balance is paid off. With a line of credit, you can borrow money as you need it, and you will have some flexibility in repaying the balance.


When trying to decide between a line of credit or a loan, one of the most important things to consider is the interest rate. In many cases, a line of credit carries with it a higher interest rate than a traditional loan does. When you open a line of credit, you will be expected to pay more interest because the lender looks at this type of loan as a little riskier. This means that you could potentially be paying much more money in interest over the life of the line of credit than if you had utilized a loan.

You should also try to determine when you need access to the money. Some people need all of the money right away, and these individuals would be better off with a traditional loan. Others need access to money periodically, and a line of credit might be more favorable to them. In some cases, traditional loans can be taken out for a longer time period than a line of credit can. This means that if you need the money for an extended period of time, you might be better off with a traditional loan.

Your level of self-discipline should also play a role in choosing between a line of credit or a loan. Individuals need self-discipline in order to handle a line of credit. Otherwise, you could find yourself making unnecessary purchases because the credit available to use.



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