Liliha - Kapalama, Hawaii
1138 North King Street
Honolulu, HI 96817

What's the Difference Between a Loan & a Line of Credit? January 9, 2018

Liliha - Kapalama, Honolulu
What's the Difference Between a Loan & a Line of Credit?, Honolulu, Hawaii

There are two main ways individuals and businesses can obtain funds on credit: Loans and lines of credit. While both options allow you to borrow from a lender, their arrangements differ greatly. Find out which option will work best for your circumstances by learning more about what sets them apart, below.

A Loan vs. a Line of Credit

An important difference is when the money can be accessed. With a loan, you apply for the amount you want and, upon approval, you get the full sum in one large payment. To get that amount again, you need to apply for another loan even after the original has been paid off. As such, this option is best for single, large purchases, like a home or car.

loanA line of credit differs from a standard loan because it's revolving. As with a credit card, you can access the money in portions or all at once, and then re-access it again as long as there is a balance on the account. If you've used the entire sum, you’ll have to pay it down to use the available amount again.

Repayment Differences

While both options accrue interest, the repayment between the two choices also differ. With a loan, there's typically a set monthly amount that stays the same throughout the payoff. The payment for a line of credit varies based on what is owed during that billing cycle.


Do you need a loan or line of credit? With hundreds of millions of dollars in assets and over 50,000 members across Hawaii, Hawaiian Tel Federal Credit Union is one of the leading financial institutions in the state, with a reputation for combining personalized service with technologically advanced personal banking solutions. Learn more about the credit union's broad array of borrowing opportunities online, follow their Facebook, Twitter, and Instagram for news and updates, or call 832-8700 on Oahu or toll-free at (800) 272-5255 with any questions.

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