Structure matters as much as the rate
FCAC describes a personal loan as a fixed borrowing amount with regular instalments, while a line provides borrowing access up to a limit. A reusable limit is not automatically an advantage: it adds flexibility but can make it easier to keep a balance outstanding.
| Question | Personal loan | Line of credit |
|---|---|---|
| How is money accessed? | A specified loan amount | Draws within an approved limit |
| Can repaid funds be borrowed again? | Usually a new borrowing decision | Usually within the existing agreement |
| What needs special attention? | Term and total repayment | Rate changes and a principal-repayment plan |
For one known expense, compare a finish line
Ask both providers what it would cost to clear the same amount over the same period. Do not compare a loan’s principal-and-interest instalment with a line’s smaller minimum and call the difference a saving. The two payments may be accomplishing different things. Request a plan that reaches zero, not simply one that keeps the account current.
For changing costs, test your own limits
If expenses arrive at different times, write down the planned draws and the income expected to repay them. A line’s interest rate may change. Test what a higher payment would do to the budget and decide how you will prevent new draws from undoing repayments. Treat an approved limit as a ceiling, not a spending target.
If the purpose is debt consolidation
List which accounts would be paid, whether there are transfer or discharge costs, and how you will avoid adding those balances back. If you cannot explain the repayment plan without using more credit later, ask about repayment support before committing to either product.
Prepare for a conversation
- The same borrowing amount for each quote.
- A common target repayment period.
- Fixed or variable rate and all fees.
- What happens if you need to repay early or miss a payment.
You do not need account numbers, a SIN, banking credentials or uploaded documents to start our enquiry.
Is a line of credit always cheaper?
No. Compare the actual offers and how long you expect to carry the balance. A lower rate can still produce a large total cost if borrowing continues for much longer.
Looking for a different kind of help?
Choose this enquiry if revolving borrowing is what you want to discuss.
Explore a line of credit instead