If you are looking for opportunities to finance a big expense, you may consider taking out a loan or a line of credit. But what’s the difference? In today’s blog, the Quick Loans team explains the difference between a loan and a line of credit, and we give advice about which one may be best for you!
What Is a Loan?
A loan is a specific amount of money borrowed from a bank or lender like Quick Loans. This loan must be paid back over a specific amount of time with interest, and oftentimes the payment amounts remain the same until the loan is paid off.
What Is a Line of Credit?
A line of credit is an account like a credit card or home equity line that allows you to spend borrowed money up to a certain amount. With a line of credit, borrowers are able to pay off the money spent on the account with interest and spend it again. Because of this, the minimum payment on the account typically changes as you spend money and pay it back. Lines of credit typically don’t close after a certain amount of time like loans do, and some allow you to withdraw cash that must be paid back over a specific amount of time.
Which Is Better? A Loan or Line of Credit?
Deciding if a loan or a line of credit is the better option will depend on several factors, including what you need money for, your financial situation, and how you plan to use the money. If you are looking to make a big purchase like a new home, a car, or an education, a loan will usually be a better option.
Lines of credit may be a better option for someone who has ongoing expenses for projects, needs a cushion for unanticipated expenses, or needs money in case of an emergency.
With a loan, most of the time your account will begin accruing interest right away and you will begin making payments over a set period of time. With a line of credit, you will only make payments and pay interest based on the amount you have spent on the account.
Fast and Easy Loans at Quick Loans
If you think that a loan sounds like a good option for you, check out our fast, easy, and friendly service at Quick Loans! With our loans, you don’t have to have good credit and we won’t make you jump through hoops, because we understand that sometimes life just gets in the way. If you live in Springfield, MO, give us a call at (417) 725-5010, visit our office in Nixa, or apply for a loan online today!