What is a line of credit personal loan?
A line of credit personal loan is a type of personal finance product that is closer in structure to a credit card. With this type of loan, you’re approved for a set limit and are able to withdraw funds at your leisure up to this amount at any given time. What makes these loans appealing to borrowers is that you aren’t forced into taking on the entire loan amount all at once and begin repaying it immediately; you can take from and repay your loan whenever you like, only paying interest on what you withdraw.
Like any other personal loan, a line of credit can be used for anything you’d like: conduct ongoing improvements around your home, pay for recurring medical expenses or simply to give you a helping hand with household bills. The borrowing power you’ll enjoy on this type of loan is also the same, with amounts ranging up to as much as $50,000. However, not all lenders will offer the same borrowing terms, so you should always compare offers to ensure that you’ll be able to access the amount you’re looking for.
It’s important to note that these loans can sometimes work out to be an expensive way of accessing personal finance, though. This is because credit line interest rates can, in some cases, be even higher than those of credit cards, which are in themselves higher than other loans like personal and car finance. Fees are also different, as credit lines come with extra costs that are difficult to avoid such as ongoing monthly fees and discharge or closing costs.
At Savvy, we help you compare some of the top personal loans from a range of flexible lenders across the country. These loans offer just as much freedom and flexibility, so it’s important to consider them when you’re making your mind up over which product to choose.
Types of personal loan
With an unsecured personal loan, you can potentially borrow as much as $75,000 without the need to attach any valuable assets, such as your car, as security. These loans are the most widely available and often the quickest, with same-day approval possible.
Secured personal loans, on the other hand, make use of collateral. This lowers your risk profile in the eyes of a lender, potentially lowering your interest rate and expanding your borrowing power beyond what you may be able to get through an unsecured loan.
Variable interest rates remain open to fluctuation during your term. This means you can benefit from decreasing rates and save on your loan if the market heads in that direction, although you’ll also pay more if rates start rising.
Fixed interest rates are locked at the beginning of your loan and remain constant throughout your repayments. This acts as a valuable protection against interest rate increases, as your loan will be unaffected, but you’ll miss out on potential drops as well.
If you’re paying off multiple debts at the moment, particularly those with high interest (such as credit card debts), consolidating them into one payment can not only make them more convenient to manage but also potentially save you money overall.
Looking to take off on a holiday with your family but want to pay it off at your own speed? Travelling can be expensive, so you can distribute the cost of your next trip over a period you’re more comfortable with by taking out a personal loan to pay for it.
There are so many costs that go into making your dream wedding a reality, from venue hire to catering to dresses and suits and so much more. By taking out a personal loan, you can start planning the big day you want, even if you can’t pay for it upfront.
Home improvements are desirable for a range of homeowners to help keep their living space fresh and interesting, not to mention increase its value. You can get past the financial hit of renovations with a personal loan paid in instalments.
Personal loans aren’t limited to PAYG employees, though. If you’re running your own business, you can still be approved for financing by submitting tax returns and other alternative documents instead of payslips and utilise your funds however you wish.
There’s a variety of expenses which come with being a student, ranging from the cost of your courses, textbooks and computer to your accommodation. Taking out a personal loan can make these costs more manageable by spacing them out.
Some lenders offer green personal loans, which are designed to be used for energy-efficient appliances and products such as solar panel and air conditioning installation in your home. You can qualify for lower interest rates and fees with this loan.
Why compare personal loans through Savvy?
How do lines of credit compare to standard personal loans?
Standard personal loans are what’s known as term loans, which are taken on and repaid within a term established at the beginning of the loan. This differs to lines of credit, which can come with a set end date but often simply run until the borrower chooses to close the account or the lender determines that the line isn’t healthy enough to continue.
Frequently asked line of credit personal loan questions
Helpful personal loan guides
Still looking for the right personal loan?
Personal loans come in all shapes and sizes, so read more about the ways you can use them, as well as how they might work for you.