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Personal line of credit loans

What’s a personal line of credit loan and where do I get one?

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Personal line of credit loans are useful in case of emergencies. However, you can use the funds for anything you choose, including consolidating your debts or making small or large purchases.

Find out more about this type of loan and if it's right for you in this guide.

What is a line of credit?

A line of credit is a form of personal loan that acts like a credit card. It's a loan that allows you to conveniently draw on funds in the form of a revolving line of credit. You pay towards your balance and the accrued interest in monthly instalments and you can access more credit (to a predetermined limit) as and when you need to.

What's the difference between a line of credit and a personal loan?

Unlike a personal loan in which the whole amount is transferred into your account, a line of credit grants you access to a credit limit, but the funds remain where they are until you decide to use them. This means you only pay interest on the funds that you use, as opposed to the entire credit amount, which you'd need to do with a personal loan.

Personal line of credit vs personal loan

There are a number of key differences between a line of credit and a personal loan that you should consider before choosing which one is more suitable for your needs. Generally, a line of credit can be more beneficial for someone looking for continued access to an amount of funds, whereas a personal loan may suit someone intending to make a large purchase or other singular expense.

How a line of credit varies from a personal loan

Citi Ready Credit

Citi Ready Credit

20.49 % p.a.

variable rate

  • Access a line of credit
  • 5.90% p.a. for 1 year on initial balances transferred (reverts to variable rate 20.49% p.a)
Security Logo

100% confidential application

Citi Ready Credit

Citibank Ready Credit Loan offers a low-rate, flexible personal loan that caters to the needs of simplifying debt.

  • Interest rate from: 20.49% p.a.
  • Interest rate type: Variable
  • Application fee: $199
  • Minimum loan amount: $5,000
  • Maximum loan amount: $75,000
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Compare a range of personal line of credit loans

Data indicated here is updated regularly
Name Product Interest rate (p.a.) Min Loan Amount Max. Loan Amount Application Fee
Citi Ready Credit
20.49%
(variable)
$5,000
$75,000
$199
Introductory fixed rate of 5.90% p.a. applies for 1 year
Get an introductory rate of 5.90% p.a. on your initial balances transferred for 1 year. Standard rate applies after this period. Note: This offer ends on 18 December 2020. Terms & conditions apply.
Credit24 Line of Credit
48%
(variable)
$500
$10,000
$0
You’ll receive a standard variable interest rate of 48% p.a.
Lines of credit loans are available from $500 - $10,000 on terms of up to 3 years.
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How does a personal line of credit loan work?

A personal line of credit works much like a credit card, giving you access to a specified credit limit to use at your discretion. The main difference between a credit card and a personal line of credit is that the credit limit is usually higher on a personal line of credit, while the rates tend to be relatively lower than credit cards. You also won't need to submit a credit application every time you need to make a withdrawal.

Once you're approved, the funds are available for you to use when you need them. You are not charged against your entire balance, only on the funds you withdraw. Some personal line of credit loans are linked to debit cards, allowing additional flexibility on how you use the funds.

Are personal lines of credit secured or unsecured?

A personal line of credit can be secured or unsecured. Which option you go for will depend on your preferences, financial circumstances and whether or not you have an eligible asset to offer as security.

Generally, opting for a secured line of credit will increase your chances of approval, give you access to a lower interest rate and increase your credit limit (usually up to the value of the asset security). Eligible security usually includes assets such as vehicles and commercial or residential property.

Unsecured lines of credit do not require an asset as security. These loans will generally require you to have an excellent credit score, may be more expensive and you could have access to a lower credit limit.

How to compare your line of credit loan options

If you're considering a line of credit loan, it's important to compare your options and find the loan that's right for you. Here are some features to keep in mind when considering the products available:

  • The interest rate. Not only will you want to compare different interest rates, you will also want to learn how they are calculated. Check that interest is only being applied on the funds you have withdrawn, not on your total balance. Keep in mind that in some cases, you may have the option of securing the loan against an asset, which could result in a lower interest rate.
  • The fees. Compare fees carefully as they are not always set out clearly. While a personal line of credit may advertise no annual fee, there could be monthly fees or an establishment fee that will result in an increase in the overall cost of the loan. Make a running list of fees for each product you are considering and factor that into your loan amount. You can use a personal loan calculator to do this.
  • Repayment terms. There are two types of personal lines of credit. There are term-plan line of credit loans in which you have a certain time frame (usually one to five years) to pay off the amount you borrowed. The other type of line of credit loan will allow you to keep the loan open so long as you continue to make regular monthly repayments. This is known as revolving credit and might be appropriate for those who want a funding source available as a safety net for unexpected expenses.
  • How accessible your funds are. Another thing to consider with this type of loan is how you will access your funds. Again, read the terms carefully. While a bank may offer a card that you can use at ATMs, there could be charges applied for this convenience. You are going to want to weigh the methods of accessing the funds along with any fees associated with them.

How to compare lenders

When it comes to finding the right personal line of credit, as well as comparing your loan options, you also have to consider what kind of lender you want to opt for. Different types of lenders offering personal lines of credit include:

main-entrance-traditional-banks-personal-line-of-credit

Traditional banks

Bricks-and-mortar banks such as the Big Four and others are an option for borrowers looking for a personal line of credit. Some individuals may prefer this as an option because they have a good longstanding relationship with their existing bank or they prefer face-to-face contact via a branch (something smaller lenders may not to facilitate). However, larger banks do tend to have higher rates and fees than smaller, non-bank lenders. They also usually require borrowers to have excellent credit ratings.

credit-unions-building-societies-personal-line-of-credit

Credit unions and building societies

These are financial institutions, also known as "mutuals", that are member-owned and not run for profit. This means that any profits that are earned are put directly back into products and services. Standard financial products are usually on offer from these institutions, including personal loans. Like banks, credit unions and building societies tend to have branches. However, you are usually required to be a member in order to apply for finance (though this doesn't mean that if you aren't a member already, that you can't join).

neobanks-personal-line-of-credit

Neobanks

Neobanks, also sometimes referred to as "online banks", source their own funding and make a margin on the difference. Often, neobanks will offer personalised interest rates to customers based on their financial circumstances and credit scores. Neobanks offer more competitive rates than their bigger opponents. Borrowers with less-than-perfect credit scores may also find it easier to be approved with a neobank (though they are unlikely to be offered the lowest rate). Neobanks don't usually have branches and are only accessible to contact via phone, email and live chat.

p2p-lenders-personal-line-of-credit

P2P lenders

Some P2P lenders may offer personal lines of credit to successful applicants. P2P lenders are finance providers that facilitate a platform where investors finance a portfolio of personal loans and earn interest on what they lend, while borrowers are given an individual rate based on their credit score. Generally, P2P lenders don't have branches and can only be found online.

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What can I use it for?

Personal lines of credit tend to be more flexible than personal loans, which means that you can usually use them for any purpose. Whether it's withdrawing cash from an ATM for groceries or paying for a luxury holiday, a personal line of credit can often cover it.

A major benefit to personal lines of credit is that they are flexible and available for multiple purposes, such as paying for your wedding, your honeymoon or some home improvements. Personal loans, on the other hand, are a lump sum payment and some lenders may limit you as to what you can use the funds for.

Things to consider

When looking for the right personal line of credit, you ought to consider the following:

Benefits

  • You're (usually) only charged for what you use. In most cases you will only be charged interest on the funds you have borrowed, not the total loan amount.
  • You can have easy access to your funds. If your account is linked to a card, you are able to draw the funds you need through ATMs and online banking.
  • There are flexible terms. You can use the funds how and when you want.

Drawbacks

  • Fees and charges. Be mindful that fees and charges will likely apply, such as an annual fee, establishment fee or a monthly service fee. These will usually be charged regardless of whether you draw down funds or not.

What are the dos and don'ts of a personal line of credit?

Dos
  • Check your credit score. The better your credit score, the lower the rate you can likely qualify for. So, it's a good idea to be in the know about what sort of shape your credit score is in.
  • Shop around. Finding the lowest rate and lowest fee loan possible will save you money.
  • Check the fine print. Read the terms, conditions and eligibility criteria carefully before applying.
  • Borrow realistically. Apply for a credit limit that is within your means to repay. Applying for too much might see your application rejected or make repaying the loan a struggle later down the line.
Don'ts
  • Skip repayments. While the repayments on a line of credit loan are generally flexible, you should read the terms carefully and meet your repayments. Failing to do so could see you incur penalty charges or even legal action.
  • Unnecessarily spend. Having a high credit limit might tempt you to overspend on purchases that you don't really need. Only use your line of credit for essentials.
  • Use a personal line of credit for your business. If you're a business owner, using a personal line of credit to support your cash flow could be a mistake, as you risk putting your personal credit in jeopardy. Luckily, lines of credit are also available specifically for businesses.

How you can apply

You can use the table found on this page to begin comparing your personal line of credit loan options. The eligibility criteria will differ between lenders, so make sure to check this carefully before submitting your application. However, you will generally be asked to provide the following information:

  • Income. You will have to show proof of an ongoing steady income. Your payslips are usually acceptable or a bank statement that shows consistent deposits from an employer.
  • Liabilities. You will need to provide a complete list of your current debts.
  • Identification. All lenders will need to see a current and valid photo ID of the applicant. In most cases you will need to provide a photocopy for their records.
  • Assets. Information regarding your home if you are a homeowner, plus any vehicles you own and any savings and investment accounts in your name.

Picture: Getty Images

More guides on Finder

Personal Loan Offers

Important Information*
Logo for Harmoney Unsecured Personal Loan
Harmoney Unsecured Personal Loan

You'll receive a fixed rate between 6.99% p.a. and 25.69% p.a. based on your risk profile.
Apply for a loan up to $50,000 and repay your loan over 3 or 5 years terms.

Logo for NAB Personal Loan Unsecured Fixed
NAB Personal Loan Unsecured Fixed

You'll receive a fixed rate between 9.99% p.a. and 18.99% p.a. ( 10.88% p.a. to 19.83% p.a. comparison rate) 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. Note: Majority of customers will get the headline rate of 12.69% p.a. (13.56% p.a. comparison rate) or less. See Comparison rate warning in (i) above.

Logo for SocietyOne Unsecured Personal Loan
SocietyOne Unsecured Personal Loan

You'll receive a fixed rate between 6.99% p.a. and 20.49% p.a. based on your risk profile
A loan from $5,000 to use for a range of purposes. Benefit from no ongoing fees and no early repayment fee.

Logo for Pepper Money Unsecured Fixed Rate Personal Loan
Pepper Money Unsecured Fixed Rate Personal Loan

You'll receive a fixed rate between 6.95% p.a. and 17.95% p.a. based on your risk profile
A loan from $5,000 to use for a range of purposes. Make additional repayments or pay off the loan early, penalty-free.

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12 Responses

  1. Default Gravatar
    PrestonJuly 11, 2018

    hi what are the minimum employment requirements for a personal loan or a line of credit

    • Default Gravatar
      JoelJuly 11, 2018

      Hi Preston,

      Thanks for leaving a question on finder.

      The eligibility criteria differ between lenders, so make sure to check this carefully before submitting your application. Be prepared with the following information as most lenders will have similar criteria necessary as part of the application:

      1. Income. You will have to show proof of an ongoing steady income. Your payslips are usually acceptable or a bank statement which shows consistent deposits from an employer.
      2. Liabilities. You are going to be asked to provide a complete list of your currents debts.
      3. Identification. All lenders will need to see a current and valid photo ID of the applicant and in most cases you will be asked to provide a photocopy for their records.
      4. Assets. Any real property you own, plus cars, savings and investment accounts.

      It is not stated on how long you should be employed to get approved for a loan and you will have to check with the lender regarding this. Typically, as long as you can prove that you have steady income and currently employed, you will be approved.

      Cheers,
      Joel

  2. Default Gravatar
    MarleneSeptember 26, 2017

    hi I have $7000 in credit card debt how can i pay it off fast.

    • Avatarfinder Customer Care
      JoanneSeptember 26, 2017Staff

      Hi Marlene,

      Thanks for reaching out.
      To give you some tips on how you can possible reduce or clear your personal debt, here is a page you can refer to. Should you want to move forward with a specific tip, a link is provided on the same page.

      Cheers,
      Joanne

  3. Default Gravatar
    TristenJune 29, 2017

    Hello i would like to borrow 10,000- 15,000 i have 1 unpaid default a payday loan with a couple of enquiries recently i am employed full time and would like to get a private used car pay any bills or debts in full with some spare to get some essential furniture so its a single payment to help so i can work on my score before I buy a house

    • Avatarfinder Customer Care
      MayJune 29, 2017Staff

      Hi Tristen,

      Thanks for reaching out.

      Typically, with bad credit personal loan, the possible loan amount may not be as much as $15,000, although, there are lenders who may offer $10,000, depending on if you meet the criteria. Although we’re not sure if you’ll be approved for a personal loan or not, you may review the criteria and contact a lender featured on this page to discuss your options and eligibility.

      Cheers,
      May

  4. Default Gravatar
    NicOctober 17, 2016

    I would like to know if people with a bad credit rating can be considered.

    • Avatarfinder Customer Care
      ElizabethOctober 17, 2016Staff

      Hi Nic,

      Unfortunately you need good credit to be eligible for Citibank’s line of credit. You can compare your short term loan options on this page, or if you;re looking for a bad credit line of credit product, Wallet Wizard and MyKredit are two options to consider.

      Hope this helps,

      Elizabeth

  5. Default Gravatar
    M.SmithSeptember 16, 2016

    Hi

    Does the Commonwealth bank provide a personal line of credit account?

    • Avatarfinder Customer Care
      ElizabethSeptember 16, 2016Staff

      Hi M.Smith,

      CommBank provides a Viridian line of credit that is linked to your home loan account. You can also consider a personal overdraft that is linked to your CommBank account.

      I hope this helps,

      Elizabeth

  6. Default Gravatar
    TinaAugust 4, 2016

    Eligibility please

    • Avatarfinder Customer Care
      MayAugust 4, 2016Staff

      Hi Tina,

      Thanks for your question.

      The eligibility criteria vary from bank to bank. But generally, these banks would approve your application based on their assessment of your income, debts, assets, credit history and provided necessary documents/information.

      Cheers,
      May

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