The Canadians for decades get a personal loan or line of credit from a lender or a bank.
However, nowadays, the market is full of loan products, making the choice quite difficult.
There are plentiful options to pick from and every option has its own intricate fine print.
The real question is – what is the difference between a line of credit and a personal loan? And when the clients are advised to apply for a line of credit over a personal loan or the other way around?
When to Choose a Personal Loan
For accessing money at a reasonable rate, Canadian consumers should choose a personal loan.
Personal loans function as a typical loan by a bank.
Before the approval, a credit score check is required.
They are offered with a variable or fixed interest rate. The borrowers have the option to pay monthly or twice in a month and even weekly or twice in a week.
The payments are usually a blend of interest and principal.
Keep in mind that the interest rate is competitive – so you’re best off comparing all offers and choosing the one that suits you the best.
Personal loans can be secured and unsecured.
The secured personal loans are backed by investments or property. The borrowers with the secured loans have lower interest rates and get access to bigger loans.
Canadians are approved for unsecured loans faster. However, the unsecured personal loans offer varying payment agreements and interest rates.
Personal loans are best suited for people who need money to make a payment for a once-in-a-lifetime purchase as putting a deposit on an estate or buying a car.
When to Choose a Line of Credit
A line of credit allows the borrowers to take money up to a predetermined limit, so it is very similar to a credit card. The consumers can spend as much as they want of the assigned credit and they can use the money for whatever they want.
Like personal loans, credit lines can be either unsecured or secured. When possible, consumers are recommended to apply for a secured credit line.
Secured credit lines usually have lower interests rate and give an upper credit limit. The credit lines with offering interest-only payment agreements, allow the consumers to repay the principal balance whenever they want.
Home Equity Line of Credit is a trendy choice in the market nowadays that enables consumers to loan money against the cost of their possessions.
HELOC is perfect if funds are needed for house maintenance or decorative or structural renovations. The borrowers do not start to repay until they use HELOC’S first dollar.
You can compare the best offers with a website like CompareMyRates that lets you compare all HELOC offers at once. It’s the best way to get the best-suited HELOC for you in the shortest amount of time and effort.
It is difficult to choose the type of loan that best suits your current situation. Before taking any kind of loan, think carefully whether you can return the money on time.
Once you have all this information, you can safely apply for a loan.