Personal Loan: Fixed Amount, Fixed Payments
A personal loan gives you a lump sum upfront with fixed monthly payments over a set term. It's ideal when you know exactly how much you need and want predictable payments.
- Fixed interest rate
- Predictable monthly payment
- Good for one-time expenses (renovations, debt consolidation)
- Funds disbursed all at once
Line of Credit: Flexible Borrowing
A line of credit works like a credit card — you borrow what you need, when you need it, up to your credit limit. You only pay interest on what you borrow.
- Variable interest rate (usually)
- Flexible withdrawals and repayments
- Good for ongoing or unpredictable expenses
- Interest only on amount used
Which Should You Choose?
Choose a personal loan if: You need a specific amount for a defined purpose and want fixed, predictable payments.
Choose a line of credit if: You have ongoing or variable expenses and want flexibility to borrow and repay as needed.
Canadian Examples
For a $10,000 home renovation with a fixed scope — personal loan. For an emergency fund or ongoing home maintenance — line of credit. For debt consolidation — personal loan (fixed rate protects against rate increases).