1. Loan and line of credit are two different ways of borrowing from a lender for personal or business use.
2. A loan is a lump sum amount of money that is for one time use whereas a line of credit is an access to a preset amount of money that can be borrowed from multiple times.
3. Interest is charged on the loan immediately irrespective of when the money is used whereas in line of credit, interest is charged once money is borrowed.
4. Loans are for specific purpose whereas a line of credit can be used for any purpose.
5. The interest rate on loans are generally lower than those on a line of credit.
(Content on this page is courtesy Centre for Investment Education and Learning (CIEL). Contributions by Girija Gadre, Arti Bhargava and Labdhi Mehta.)
