Personal loan vs line of credit

Find out if a line of credit or personal loan is right for you and compare them now.

Both a personal loan and line of credit give you access to finance when you need it, but both have their benefits and drawbacks.

Learn how they differ and see your finance options below.

Compare personal loans and lines of credit

Rates last updated April 26th, 2019
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Name Product Interest Rate (p.a.) Comparison Rate (p.a.) Min Loan Amount Loan Term Application Fee Monthly Service Fee Product Description Monthly Repayment
Citi Personal Loan Plus
From 8.99% (variable)
9.67%
$5,000
3 to 5 years
$0 ($199 establishment fee waived)
$10
You'll receive a variable rate between 8.99% p.a. and 17.99% p.a. (9.67% p.a. to 18.6% p.a. comparison rate) based on your risk profile
A credit limit up to $75,000 that you can continue to draw down over terms up to 5 years. Note: The establishment fee will be waived if you apply before 30 June 2019.
NAB Personal Loan Unsecured Fixed
Headline rate 12.69% (fixed)
13.56%
$5,000
1 to 7 years
$150
$10
You'll receive a fixed rate between 10.69% p.a. and 18.69% p.a. based on your risk profile
An unsecured loan up to $55,000 you can use for a range of purposes and pay off over up to 7 years.
RateSetter Unsecured Personal Loan - 3yr Variable
From 6.89% (variable)
8.89%
$2,001
0.5 to 5 years
$299
$0
You'll receive a variable rate from 6.89% p.a. based on your risk profile
A flexible loan with amounts from $2,001 and terms starting from 6 months. Interest and comparison rates calculated for a loan term of 3 years.
Westpac Unsecured Personal Loan
12.99% (fixed)
14.14%
$4,000
1 to 7 years
$250
$12
You'll receive a fixed rate of 12.99% p.a.
Benefit from the security of a fixed rate with the flexibility of additional repayments. Existing Westpac customers may qualify for discounts.
Wisr Personal Loan
From 8.5% (variable)
9.36%
$5,000
3 to 5 years
$595
$0
You'll receive a variable rate between 8.5% p.a. and 18.5% p.a. based on your risk profile
A loan from $5,000 that charges no fees for extra or early repayments. Keep in mind security is required in some cases. Note: WISR is not available to applicants who have previously taken out payday loans.
ING Personal Loan
8.99% (fixed)
9.13%
$5,000
2 to 5 years
$100
$0
You'll receive a fixed rate of 8.99% p.a.
Benefit from no ongoing fees, no early repayment fees and flexible loan terms on amounts up to $30,000.
ANZ Fixed Rate Personal Loan
12.45% (fixed)
13.32%
$5,000
1 to 7 years
$150
$10
You'll receive a fixed rate of 12.45% p.a.
Apply for up to $50,000 to use for a variety of purposes without needing to add security. Available to self-employed applicants.
NOW FINANCE Personal Loans
From 8.95% (fixed)
10.56%
$5,000
1.5 to 7 years
$495 (Based on $10,000)
$13
You'll receive a fixed rate between 8.95% p.a. and 16.95% p.a. based on your risk profile
Apply for loans from $5,000 and get a dedicated loan manager. No security required.
Latitude Personal Loan (Unsecured)
From 13.99% (fixed)
15.19%
$3,000
2 to 7 years
$250 (Loans under $4000 - $140)
$13
You'll receive a fixed rate between 13.99% p.a. and 29.99% p.a. based on your risk profile
Apply for what you need from $3,000 and use it for a range of purposes. Flexible repayments options.
Latitude Low Rate Personal Loan (Unsecured)
10.99% (fixed)
12.21%
$20,000
2 to 7 years
$250
$13
You'll receive a fixed rate of 10.99% p.a.
A secured or unsecured loan available to homeowners with a large minimum borrowing amount of $20,000. Benefit from flexible repayments and fast approval.
St.George Unsecured Personal Loan - Fixed Rate
From 12.99% (fixed)
14.06%
$2,000
1 to 5 years
$195
$12
You'll receive a fixed rate between 12.99% p.a. and 18.9% p.a. based on your risk profile
A low minimum borrowing amount of $2,000 to fund a range of purposes.
RACQ Bank Unsecured Personal Loan
12.95% (variable)
13.25%
$3,000
5 years
$200
$0
You'll receive a variable rate of 12.95% p.a.
A low minimum borrowing amount of $3,000 that you can use for a range of purposes. Benefit from member discounts and flexible repayments. Only available to QLD residents
ANZ Variable Rate Personal Loan
15.99% (variable)
16.84%
$5,000
1 to 7 years
$150
$10
You'll receive a variable rate of 15.99% p.a.
A flexible loan with amounts starting $5,000 that offers flexible repayments and a redraw facility.
NAB Personal Loan Unsecured Variable Rate
Headline rate 12.69% (variable)
13.56%
$5,000
1 to 7 years
$150
$10
You'll receive a variable rate based on your risk profile. The headline rate is 12.69% p.a.
An unsecured loan up to $55,000 you can use for a range of purposes. Benefit from fee-free additional repayments and a redraw facility.
St.George Unsecured Personal Loan - Variable Rate
From 12.99% (variable)
14.06%
$2,000
1 to 7 years
$195
$12
You'll receive a variable rate between 12.99% p.a. and 18.9% p.a. based on your risk profile
A low minimum borrowing amount of $2,000 plus the convenience to make extra repayments and redraw them if you need them.
MyState Bank Unsecured Personal Loan
12.99% (variable)
16.42%
$3,000
1 to 7 years
$200
$10
You'll receive a variable rate of 12.99% p.a.
Apply for up to $50,000 and benefit from features such as fast approval, free online redraws and no penalties for early repayment.

Compare up to 4 providers

Rates last updated April 26th, 2019
Name Product Interest Rate (p.a.) Min Loan Amount Max. Loan Amount Application Fee Product Description
Citi Ready Credit
From 5.9% (variable)
$5,000
$75,000
$199
Introductory variable rate of 5.9% p.a. applies for 3 years.
Get an introductory rate of 5.9% p.a. on your initial balance for 3 years. Standard rate applies after this period.

Compare up to 4 providers

The main points of difference

  • Loan term. Personal loans have a fixed term of anywhere between one and seven years, and need to be paid back in full by the end of that term. Lines of credit don't come with a "term" and the funds you borrow become available again after they're repaid (plus interest).
  • Repayments. Both involve monthly repayments. However, personal loans have fixed monthly repayments while lines of credit depend on the previous balance, amount drawn, accruing interest and other factors.
  • Time of disbursement. With personal loans, your lender will disburse your funds up-front as soon as you agree on the loan contract and sign it. With a line of credit, you're able to withdraw up to your approved limit on an ongoing basis as long as you're meeting minimum monthly repayments
  • Fees. Personal loans usually charge monthly service and application fees while lines of credit usually charge annual service fees. However, lenders for both personal loans as well as lines of credit may charge a variety of other hidden fees. Make sure you're aware of all fees for any option you're considering.

Features of personal loans and lines of credit

Personal loan

Personal loans provide your funds up-front and stipulate an agreed time period to pay back your loan (called the “loan term”). Interest is charged on the entire duration of your loan term and on your entire loan amount. In general, most personal loans involve the following features:

  • Up-front lump-sum. Once the lender approves your application and you agree to the loan contract, you’ll receive all your funds up-front.
  • Interest rate. Your lender will charge either a fixed interest rate that won’t change over the term of your loan, or a variable interest rate which can rise or fall depending on market rates.
  • Term. The period over which you’ll be making repayments to fully pay back the loan is called the loan term. It generally ranges between one year and seven years.
  • Discount rates. Your lender may offer you a limited time discount if you take out a significant loan amount.
  • Flexible repayments. Depending on your lender, you may be able to choose exactly how you’ll be making monthly repayments.

Line of credit

Lines of credit have a maximum credit limit and you’ll only be charged interest on the funds you actually use. Repayments are made monthly but there is no fixed “term” for a line of credit. As long as you’re making your minimum monthly repayments, your funds will always be available to you.

  • Option to increase maximum credit limit. Your lender may provide an option to increase the maximum credit limit in line with your specific needs.
  • Flexible withdrawals. You’ll be able to withdraw funds from your line of credit whenever you like, as long as it doesn’t exceed your maximum credit/daily limit.
  • No fixed repayments. As long as you’re making a minimum required monthly payment (a percentage of withdrawn funds), there’s no fixed repayment amount.
  • Interest rate. Interest is paid monthly and is only charged on the amount you have used.

Which is suited to you?

A personal loan is suited to someone who wants structured repayments and an initial lump sum paid to them at the beginning of the loan term. A personal loan is well suited for those looking to make large purchases such as for a wedding or car using that lump sum. A personal loan can also be appropriate for those looking to consolidate a large amount of debt.

A personal loan may also be better-suited for those who are generally unable to pay their monthly credit card balance in full since not doing so for lines of credit could get very expensive.

Lines of credit are helpful for those needing ongoing sources of funding to be used when they see fit. Since lines of credit are revolving, you won’t be charged on funds you don’t use, making them an excellent option as a backup source of funding.

Since interest rates could get expensive for lines of credit, they are suited to those looking for flexibility with their credit and an ongoing source of funds for purchases such as paying bills, consolidating short-term debt and shopping.

Questions to ask to find the right loan for you

While it will depend on your particular situation, you can get a clearer picture of your decision by asking yourself the following questions:

What do you need the funds for?

If you’re looking to use the funds for large purchases, you’d probably be better off with a personal loan. If you want an ongoing source of funding then a line of credit would be more suitable.

How flexible are you with repayments?

Whichever option you consider, make sure you’re well aware of how disciplined you’ll need to be with repayments. Some people are tempted to use a line of credit simply because it’s there. If this could be a problem for you, you may be better off with the structured features of a personal loan since they offer fixed-repayment schedules, giving you consistency and balance.

How much do you need?

Unsecured personal loans may offer about $55,000 while secured personal loans would depend on the worth of the collateral you offer up as security, but can be as much as $80,000. On the other hand, not many lenders approve small amounts for personal loans but do so for lines of credit. Very large lines of credit are also available, but you’ll need to meet strict eligibility criteria.

Picture: Shutterstock

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Personal Loan Offers

Important Information*
Citi Personal Loan Plus

You'll receive a variable rate between 8.99% p.a. and 17.99% p.a. (9.67% p.a. to 18.6% p.a. comparison rate) based on your risk profile
A credit limit up to $75,000 that you can continue to draw down over terms up to 5 years. Note: The establishment fee will be waived if you apply before 30 June 2019.

NAB Personal Loan Unsecured Fixed

You'll receive a fixed rate between 10.69% p.a. and 18.69% p.a. based on your risk profile
An unsecured loan up to $55,000 you can use for a range of purposes and pay off over up to 7 years.

RateSetter Unsecured Personal Loan - 3yr Variable

You'll receive a variable rate from 6.89% p.a. based on your risk profile
A flexible loan with amounts from $2,001 and terms starting from 6 months. Interest and comparison rates calculated for a loan term of 3 years.

Westpac Unsecured Personal Loan

You'll receive a fixed rate of 12.99% p.a.
Benefit from the security of a fixed rate with the flexibility of additional repayments. Existing Westpac customers may qualify for discounts.

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