Personal Loan vs Line of Credit: Which Is Cheaper in Canada?

Both are unsecured borrowing from a bank, credit union or online lender. The difference is structure.

Personal loan

• One lump sum, fixed rate, fixed payment, end date.
• Good for: a single known cost, or consolidating cards into one payment you can't extend.
• Estimate it with the loan calculator.

Line of credit

• A limit you draw from and repay as you like; interest only on what you use.
• Variable rate tied to prime.
• Good for: irregular costs (a renovation in stages), or an emergency backstop.
• Risk: no end date, so it's easy to never pay down. See what a line of credit costs.

Which is cheaper?

Lines of credit often start at a lower rate for good credit. A personal loan is often cheaper in practice for people who'd otherwise carry a balance for years, because the fixed schedule forces payoff.

Compare lenders

See Canadian lenders sorted by rate on our best personal loans page, check your debt-to-income ratio, and compare by APR.