Line of Credit (LOC)
Quick Definition
A revolving credit facility allowing flexible borrowing up to a limit, with interest on drawn amounts.
Full Explanation
A line of credit (LOC) is a flexible credit facility that allows you to borrow up to a preset limit, repay, and borrow again as needed. Unlike a term loan, you only pay interest on the amount actually drawn. Personal lines of credit in Canada typically range from 4.99%–10.99% for secured lines (like HELOCs) and 7.99%–19.99% for unsecured personal lines of credit. Lines of credit are commonly used for emergency funds, ongoing renovation projects, or managing irregular cash flow. Credit unions often offer lower rates on lines of credit than major banks.
Related Terms
HELOC (Home Equity Line of Credit)
A revolving credit line secured by your home equity, up to 80% LTV.
Credit Card
A revolving credit facility allowing purchases up to a limit, with a standard 19.99% interest rate.
Interest Rate
The percentage charged on the principal loan balance per period.
Secured Loan
A loan backed by collateral — an asset the lender can seize if you default.
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