If you’re deciding between a personal loan and a line of credit, it may help to understand typical uses of each.
A line of credit is often used for emergency funds or unspecified purposes with an unclear final amount, including:
- Making emergency home improvements
- Smoothing out cash flow problems caused by fluctuating income and expenses, which may be more likely if you’re self-employed
- Paying a larger-than-expected bill, such as medical expenses or auto repairs
An installment loan, also knows as a personal loan, however, is often used for specified purposes with a clearer total, such as:
- Covering a large budgeted expense, such as paying for a wedding
- Paying for a one-time purchase, like a car or a home appliance
- Consolidating debt at a lower interest rate than credit cards typically carry
- Repaying money borrowed from family or friends
- Education expenses
- Home improvements using a home equity loan
Whether you need a personal loan or a line of credit, speak with a personal banker who can help you understand your options.