Personal Loan or Credit Line – Which One Is Better?

In life, you often tend to come across a scenario where you may find yourself short of funds when they may be most needed by you. As an outcome, you opt for financial help usually credit options to meet your specific needs. However, as the lending market is filled with a wide host of distinct financial options, it often appears tough to find out exactly which choice you must go for that may best match your needs. May it be a line of credit or a personal loan, what you choose is important as it further impacts your future financial decisions.

So, when it is about finances, it is necessary for you to research in-dept and get as much info as possible regarding distinct financial options to arrive at a better decision. Discussed in this blog is all about personal loans, credit lines and more.

A personal loan refers to a financial option that permits you as a borrower to take up instant funds without any restriction. This is an unsecured credit option meaning you do not require to pledge any security or asset for availing the required loan proceeds. Note that, you can get this loan at a lower rate of interest and processing charges if you hold a higher credit score. For instance, if you are eyeing to avail an SBI loan at a lower SBI personal loan interest rate, then you must ensure to have a higher credit score of 750 and above. Also, if you are eligible to get the loan, ensure you use an online SBI personal loan EMI calculator to compute the loan EMI and overall interest constituent as per your requirement, preferences, and cash inflows.

While the personal loan features may differ between distinct lenders, a few attributes of the loan generally include the following –

  • Zero security or collateral required – 

As stated previously, a personal loan basically is an unsecured credit option, meaning there’s zero collateral or security involved. You can simply get the loan if you meet the eligibility parameters and submit the necessary documents.

  • Flexible loan repayment tenure – 

Most lenders offer personal loans with loan repayment tenure of up to 5 years. This endows you as a borrower with sufficient time to repay the loan proceeds in a hassle-free and stress-free manner.

  • Minimal documentation – 

With the processing of personal loans becoming extremely automated and streamlined nowadays, you as a borrower can simply place an application for a personal loan with minimal/basic documents asked by the lender for your background and KYC authentication process.

  • High loan proceeds – 

You can get the personal loan from lenders with a high loan proceeds of up to Rs 30 lakh permitted you to meet any financial goal or requirement without fretting much regarding the fund shortage.

  • Zero restriction on the end usage of the loan proceeds – 

Personal loans may be used to meet any of the purposes with zero end usage restriction. Whether it is for meeting your healthcare bills, overseas education, hosting a wedding or travelling expenditures, a personal loan comes across as an answer for most of the financial challenges in life.

  • Quick loan approval and disbursal – 

Nowadays placing an application for a loan is easy and simple. If you are looking out for a loan, apply through the online mode. For this, all you must do is ensure to review your personal loan eligibility and submit the minimal required documents for loan application and you are all set to go.

Once your loan application is approved and your KYC and background authentication are complete, you can receive the required loan proceeds in just no time.

What’s the credit line? Definition, kinds, and examples – 

A LOC (line of credit), as suggested by the name is nothing but a revolving credit that has a predetermined limit. You can avail the borrowed funds whenever required until you approach the credit limit. You can even continue borrowing funds when you require them through the open credit line option, meaning in the case you are regular with your past repayments, then the credit line would remain open.

Common features linked with credit lines – 

Both unsecured and secured 

Credit line can be both unsecured and secured based on the kind of LOC that you want to take up to meet your requirements. While LOCs usually are unsecured, a few LOCs such as HELOC (Home Equity Line of Credit) tend to put up equity in your existing home as security or collateral.


The most crucial feature of the credit line is that it provides flexibility by permitting you to take up funds when required to meet specific needs in place of borrowing a lumpsum amount in one shot.

Interest constituent on the fund borrowed

When availing proceeds from the credit line, you as a borrower can simply make payment of the interest on the fund borrowed in place of the whole credit line.

Adjustment on repayment 

You even can adjust the repayment figure on the borrowed amount according to your requirements. It can be decided as per your cash flow or budget at the repayment time.

No pre-defined buying intent is needed

A credit line does not need any predefined purchase or usage. Borrowing of funds is allowed according to your current financial needs.

Repayment according to your usage 

Unlike most credit options where you require making the repayment over a particular time period in EMI form, the

repayment tenure of the credit line can be done anytime as per your cash inflow and potential.

Credit line or personal loan – What are the key differences?

Now that you are aware of the line of credit and personal loans and their respective benefits and benefits, read on to know the distinctions between both the products –


While both line of credit and personal loans provide flexibility in terms of making repayment, the loan tenure for both usually varies. While the personal loan tenure is predefined as per the loan terms and conditions, the credit line tenure is based on the funds’ usage and not the whole line of credit.

Rate of interest 

The personal loan interest rate is predetermined and fixed. In contrast, a credit line has a variable rate of interest as applicable on the borrowed amount.

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