What is the difference between a fixed-rate loan and a credit line loan

Quick And Easy Personal
Loans Up To $2500

By CreditNinja
Modified on January 19, 2024

The difference between a fixed-rate loan and a credit line loan is that a fixed-rate loan provides the borrower with a set amount of cash for one-time use and a line of credit is a revolving amount of money the borrower can use and repay repeatedly up to a certain amount. 

But what exactly do we mean by a “fixed-rate” loan? Fixed-rate refers to the interest rate of a loan. It means that the interest rate will stay the same during the entire repayment period of the loan. An interest rate can either be fixed or variable-rate. A Variable rate is one that may go up or down throughout the loan based on the benchmark rate used by large banks. 

Regardless of whether your loan has a fixed or variable interest rate, it functions the same way. The borrower applies for a loan, and the lender either approves or denies the application. If approved, the borrower will receive a set amount of money determined by the lender. They will then have a certain amount of time to repay the loan through monthly payments. Once it’s paid off, the loan contract ends and the process is complete. 

A line of credit works a bit differently. The application process is similar, as you would still need to apply and be approved. Once approved, the lender would then open a credit line for you and give you access to it. This means you have a set amount of money that you can pull from when needed. You don’t have to use the entire amount available to you, but you can. You can then repay whatever you use, and have the full amount available to you again. This is similar to a credit card, as you can use this money repeatedly. 

Whether you choose a loan or line of credit will depend entirely on your specific financial situation and your current needs. Lines of credit are more commonly used by businesses or for home costs, like a home equity line of credit (HELOC). If you only need a set amount of money for one-time use, then a personal loan may be a good option.

General Questions
How do you calculate interest rate on a personal loan
Which bank will provide personal loan easily
Which type of loan can be used for debt consolidation
Can I borrow money for a down payment?
What is a good apr rate for a personal loan
What is the easiest type of loan to get with bad credit?
How do you calculate apr on a loan
How can I get loans for 500 credit score
What is the easiest bank to get a personal loan from
What is a personal loan used for
Which bank has the lowest interest rate for personal loan
What is a benefit of obtaining a personal loan
Who offers payday loans in ohio
What states prohibit payday loans
Does colorado do payday loans
Can uber drivers get payday loans
Does money tree do payday loans
In what states are payday loans illegal
Does sc do payday loans
Does ohio still have payday loans
Does oklahoma do payday loans
Does tennessee do payday loans
Does walmart offer payday loans
Does georgia have payday loans
How do you guarantee a personal loan
Is there a way to get a loan without a bank account
What happens if you don’t pay back a personal loan
How does an amortizing loan work
How does co-signing a loan work
How to structure a loan for six months fixed interest rate
What is the difference between a fixed-rate loan and a credit line loan
How can a loan have a fixed apr but variable interest rate
How do I know if my loan is fixed-rate
What happens if you don’t pay debt consolidation loans?
What is an unsecured debt consolidation loan
How do co-signed loans work
How long does it take to get a payday loan

Quick And Easy Personal Loans Up To $2500*