By Nicole Dow | NerdWallet

Personal loans and personal lines of credit are both helpful tools to cover large expenses. These financing options have similar benefits, like no collateral requirements and low rates for well-qualified borrowers, but deciding which is right for you comes down to how you prefer to receive and repay the funds.

Learn the similarities and differences between personal loans and personal lines of credit to determine which is right for your plans.

Personal loans and lines of credit: How they’re similar

Personal loans and personal lines of credit are typically unsecured, meaning you don’t have to pledge an asset as collateral in order to borrow. It also means the lender will rely mostly on your credit, income and existing debts to determine whether you qualify.

When you apply for either financing option, the lender will pull your credit report to examine your creditworthiness and how you handle existing debts. Applicants with good credit and low debt-to-income ratios have the best chances of qualifying and getting the lowest rates.

“The qualifications for both loan types are determined by an individual’s credit experience, employment stability and ability to repay the debt,” Jean Hopkins, director of consumer lending at WeStreet Credit Union in Tulsa, Oklahoma, said in an email interview.

Banks and credit unions offer personal loans and lines of credit, while online lenders offer personal loans, but usually not credit lines. Qualified applicants may be able to borrow up to $100,000 with either type of financing.

With both options, borrowers repay the debt, plus interest, over time. Missed payments are typically reported to credit bureaus after 30 days and can negatively impact your credit score.

Key differences between personal loans and credit lines

Though qualifying for these two financial products can work similarly, they are two different types of credit. A personal loan is a type of installment loan, and a personal line of credit is a type of revolving credit.

With a personal loan, you receive funds as a lump sum and make payments in even installments over a fixed term, typically two to seven years.

Interest on personal loans is charged on the entire loan amount at a fixed rate.

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Personal lines of credit are revolving credit, so you can borrow against your predetermined credit limit as needed and access more money as you make payments.

“When payments are applied to the principal balance of a line of credit, that amount is made available to borrow again,” Hopkins said.

A personal line of credit generally has a “draw” period and a “repayment” period, Katherine Fox, certified financial planner and founder of Sunnybranch Wealth in Portland, Oregon, said in an email.

The draw period is when you can access money from the credit line and make minimum monthly payments or interest-only payments, depending on the lender. This period typically lasts from two to five years. Once the draw period is over, you’ll enter the repayment period, when you can no longer withdraw money and must make payments until the end of the term, which can be up to 10 years.

Personal lines of credit have variable interest rates, and you only pay interest on the amount you draw. This means the monthly payment on a personal credit line can fluctuate.

Finally, the fees are different on personal loans and personal lines of credit. A personal loan may come with an origination fee, which the lender typically takes from the loan before sending you funds. A personal line of credit may have an annual maintenance fee as well as withdrawal fees every time you access funds.

When to consider a personal loan

A personal loan is a good idea when you know exactly how much you need to borrow and want a predictable repayment schedule. It can be ideal for:

A large purchase.
Debt consolidation.
A one-time emergency.

“If you have an immediate need for a specific amount of cash, it makes more sense to get a personal loan,” Fox said. “You get all the cash you need at once and you will pay it back with a fixed interest rate.”

A personal loan may also be cheaper in the long term because you lock in an interest rate for the full loan term, Hopkins said. If the federal funds rate rises while you’re repaying a personal loan, for example, your rate and monthly payment won’t increase.

Additionally, while interest rates are heavily based on the borrower’s credit and income, starting rates may be lower on personal loans than on personal credit lines.

Pros and cons of personal loans

Pros

Fixed interest rates keep monthly payments predictable.
Low interest rates for borrowers with good or excellent credit.
No collateral needed.

Cons

Bad credit may prevent you from qualifying.
Possible origination fee.
Can’t access additional funds after borrowing.

When to consider a personal line of credit

You might consider opening a personal line of credit if you need ongoing access to cash. This financing option may be ideal if you expect your expenses to fluctuate over time. Examples of expenses that may be right for a personal line of credit include:

A home renovation project.
A cross-country move.
A wedding.

“If you are uncertain if you will need cash, uncertain about how much you will need and/or uncertain when you will need it, a personal line of credit may make more sense” than a personal loan, Fox said. “It gives you the flexibility to pull out more or less cash on your own timeline, rather than getting a single lump sum that you are responsible for repaying.”

Pros and cons of personal lines of credit

Pros

Easy access to money as you need it.
Only pay interest on what you borrow.
Low interest rates for borrowers with good or excellent credit.
No collateral needed.

Cons

A variable interest rate means payments may be harder to budget for.
Bad credit may prevent you from qualifying.
Possible annual and withdrawal fees.

Nicole Dow writes for NerdWallet. Email: articles@nerdwallet.com.

The article Personal Loan vs. Line of Credit: How to Choose originally appeared on NerdWallet.

The death of an infant boy from White Bear Lake was a homicide, the Hennepin County Medical Examiner’s Office announced Thursday.

White Bear Lake police were called to M Health Fairview St. John’s Hospital in Maplewood on the evening of Jan. 31 on a report of possible child abuse, according to Police Chief Dale Hager.

“This case has been under investigation since that time,” he said in a Thursday statement.

Three-month-old Jackson Dallas Forster, who’d been transferred to M Health Fairview Masonic Children’s Hospital, died at the Minneapolis hospital on March 22. He suffered complications from brain bleeding, according to the medical examiner’s office.

No one is under arrest and the investigation continues, according to Hager. The Ramsey County Attorney’s Office is reviewing a case for potential charges.

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The NCAA has presented a plan to Division I conference commissioners that would expand the lucrative men’s and women’s basketball tournaments by four or eight teams alongside an option to leave each field at 68 teams, according to a person familiar with the details.

The proposals were outlined to the commissioners this week by NCAA Senior Vice President of Basketball Dan Gavitt and NCAA Vice President for Women’s Basketball Lynn Holzman, the person told The Associated Press on Thursday on condition of anonymity because no official announcements have been made. The news was first reported by Yahoo! Sports.

Under the proposal, expansion of the 68-team field included both four- and eight-team models. The NCAA would keep its 64-team bracket but would add play-in games involving the 10 through 12 seeds.

If the men’s tournament were to expand, it is expected the women’s tourney would as well.

There are many in college basketball who have said they believe the 68-team fields and three weekends of play are ideal, but pressure has grown to add teams and games to one of the most popular sports events on the U.S. calendar. Last year, the NCAA Division I board of directors approved recommendations that included allowing one quarter of teams in larger sports to compete in championship events; in that scenario, March Madness tourneys could expand to nearly 90 teams.

The NCAA is currently in the midst of an eight-year extension of its TV deal for the men’s tournament worth $8.8 billion that runs through 2032. That would not be expected to change if a handful of teams are added.

More games would provide a small boost through ticket sales and merchandise, but the pool of money the NCAA uses to pay out conferences and member schools would essentially stay the same. What could change, however, is how that money would be divided up if the tournament broadens.

Expansion would also mean the men’s tournament would have to find an additional site besides Dayton for its First Four games. The Ohio city already has games on Tuesday and Wednesday and wouldn’t be able to host additional play-in games ahead of the tourney’s traditional first-round opening on Thursday. Women’s play-in games are at the same campus sites as the first two rounds of the tournament.

Expansion is largely backed by larger conferences and smaller leagues do not want to lose the automatic bids that come with a conference tournament championship, or face the prospect of always being slotted for the play-in games.

The earliest the NCAA Tournament could expand would be the 2025-26 season, the person told AP. The NCAA basketball oversight committee meets next week and the tournament selection committee has a meeting next month.

The men’s tournament last expanded in 2011 when it went from 64 to 68 teams. The women’s tournament matched that in 2022.
The women’s tournament is coming off its most successful year ever that included a record audience of 18.7 million for the title game win by South Carolina over Iowa, the highest for a basketball broadcast of any kind in five years. It outdrew the men’s championship game — UConn winning its second consecutive title with a win over Purdue — by nearly 3 million viewers. The women’s tournament also had record attendance.

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