Personal Loan Vs. Line Of Credit

Both personal loans and lines of credit let you borrow money, but they work very differently.

• A personal loan gives you one lump sum up front, with fixed payments over a set term.

• A line of credit gives you a reusable limit you can dip into when you need it, and you only pay interest on what you actually borrow.

Which one is better depends on whether your costs are one-time and predictable, or ongoing and flexible.

KOHO Line of Credit

With KOHO Line of Credit, you can:

• Apply online for about $1,000–$15,000 in available credit

• Get interest rates as low as 19.9%

• Only pay interest on what you actually use, not on your full limit

• Avoid extra charges—no late, annual, or origination fees, just the interest on what you borrow

• Apply without a hard credit hit; checking if you qualify won’t impact your credit score

It’s a fit for things like unexpected expenses, cash-flow gaps, or staggered costs (e.g., moving, small home setup, or ongoing school/life expenses), rather than a one time major purchase.

What is a Personal Loan?

A personal loan is a one time lump sum you borrow and then repay over a fixed period.

Typical features:

• Fixed amount (for example, $5,000 or $15,000)

• Fixed term (like 3 or 5 years)

• Set monthly payments that include principal + interest

Best for:

• One big, clear expense: debt consolidation, a used car, a major home project, or a large medical or family cost

• People who like predictable payments and a clear payoff date

Drawback: if you end up not needing all the money, you’re still paying interest on the whole amount.

What is a Line of Credit?

A line of credit (LOC) works more like a reusable borrowing pool:

• You’re approved for a maximum limit

• You can borrow, repay, and borrow again up to that limit

• You only pay interest on what you’ve actually borrowed, not on the entire limit

• Payments can be more flexible (often interest-only minimums, with the option to pay extra)

Best for:

• Ongoing or uncertain costs (moving, house setup, school-related living expenses)

• Covering short-term cash-flow gaps or irregular expenses

• People who want the option to borrow, but don’t want to commit to a big lump-sum loan

Drawback: because it’s flexible, you need discipline—if you keep using it without paying down the balance, it can hang around for a long time.

Personal Loan vs Line of Credit: Which Should You Choose?

A personal loan might be better if:

• You know exactly how much you need, and it’s a one-time expense

• You want fixed monthly payments and a clear end date

• You’re consolidating debt into a structured payoff plan

A line of credit might be better if:

• Your expenses are spread out or unpredictable

• You only want to pay interest on what you actually use

• You want a flexible safety net for short-term or medium-term needs