Clix > Finance > Personal Loan vs Personal Line of Credit — What’s the difference?

Personal Loan vs Personal Line of Credit — What’s the difference?

Clix November 13, 2018

Savings are generally considered to be the easiest option to look upto when in case of need. However, ideal situations rarely arise in matters of money, and the reality of life can hit you hard at times. From requiring urgent funds at a moment’s notice to facing a declining level of income – there is no end to the financial problems you might face in your life.


Thankfully, if you require funds somewhat urgently, then both personal loans and personal lines of credit are options that can help you out.  Most people consider them synonymous. But once you’re done reading this blog you’ll know they’re not one and the same.

Here’s how they’re different:

Fund Disbursement

In case of a personal loan, you receive your loan amount upfront as soon as your request is approved. But remember, the minimum and maximum limit that you can apply for depends on your credit history, loan tenure and the relationship you share with your borrower. On the other hand, a personal line of credit gives you the loan amount in installments as per your requirement. In this case, the borrowing limit is usually capped by lending organizations.

Interest Rates

The interest rate is pre-determined by the loan tenure, amount borrowed, and credit history when it comes to a personal loan. And in the case of a personal line of credit the interest rate may be higher than a personal loan. Why? Because lending organizations operate at higher risks and might charge you with an annual fee to cover it.

Mode of repayment

In terms of repaying a personal loan the system is quite rigid — since you have to pay your EMIs until the loan ends. If you do get your hands on surplus funds before the tenure ends, you can use it to repay the loan, as long as you pay the penalty charges. However, in case of a personal line of credit you can pay the entire amount at the end of the tenure. But you still have to pay interest at the end of every month depending on how much you withdraw.


Now that you’ve understood the difference you’ll be able to choose what’s best for you.

Just remember that personal loans can be used to cover huge investments or costs in one go, while personal lines of credit can be used to borrow as much as you need and whenever you may need it.


Easy, wasn’t it?


T&C Apply. Disbursal of the loan shall be at the sole discretion of Clix Capital Services Private Limited and it’s group companies subject to its policies and execution of such documents as maybe necessary


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