When it comes to borrowing money, you might be curious about the difference between personal loans vs. lines of credit, how interest rates work, and how funds are paid out?

In the meantime, whether you’re considering debt consolidation or a home improvement project, here’s a breakdown.

At University Credit Union, we’ll help you sort through personal loans and lines of credit to find the best solution for your financial situation.

Personal Loans

Most personal loans are unsecured, meaning you don’t have to put up any kind of collateral, such as a car. Personal loans are repaid over a period of time with specific or fixed terms. You receive your loan amount upfront in a lump sum that you pay off throughout the remainder of the loan term. This option is best for one-time purchases.

University Credit Union offers personal loans at competitive rates. You can choose from a variety of repayment terms to suit your goals and situation. UCU offers terms up to 60 months.

Personal loans are typically used to pay for a one-time expense, such as a wedding or a big vacation. Another common use is to consolidate debt, such as your school expenses and credit card debt.

Lines of Credit

Lines of credit are very similar to credit cards as they are a revolving account. They are also unsecured and have a variable interest rate. Lines of credit are best used when you want to have available cash for purchases or other expenses.

During your draw period–typically about ten years–you have access to your available credit limit; allowing you to take out money as needed in making payments only on what you use.

You can take out money as needed up to a certain credit limit, making payments as you go.

Uses for Personal Lines of Credit

Common uses for personal lines of credit include:

  • Emergencies
  • Consolidation of debts with higher interest rates
  • A major project or expense (i.e. medical, a home improvement project, or higher education expenses)


University Credit Union offers Home Equity Lines of Credit (HELOCs), in which you borrow against the equity of your home. If you are a homeowner who has built up enough equity, you may find that a HELOC is the right option for you. Especially if you are planning to use the funds for home improvement or construction, the interest might even be tax-deductible.

If you’re considering paying off your student loans with a personal loan, UCU also offers student loan refinancing, or new student loans for your graduate or undergraduate program.

How Do I Qualify for a Personal Loan or Line of Credit?

Qualifying for either of these personal loan types is fairly straightforward. UCU’s lending team is available to answer your questions and help find the right fit for you. One of the benefits of taking out either a personal loan or line of credit through a credit union is that they are not-for-profit financial institutions and member-owned. That means, unlike a traditional bank that receives compensation from financial products and services, credit unions can offer lower interest rates to members.

It also means that we can work with you if you have less-than-perfect credit. Keep in mind, the higher your credit score, the lower your interest rate will be. University Credit Union will help you find the right solutions for your financial circumstance so that you can accomplish your goals.

We also offer our members help with resources to help you find more effective ways to save, spend and invest.

University Credit Union Personal Loans & Lines of Credit

If you think a personal loan or line of credit might be right for you, University Credit Union can help. UCU’s Lending Team is ready to help you! Please give us a call at 800.UCU.4510. Or, feel free to apply online if you’re ready.

Not sure whether a personal loan or line of credit is right for you? Check out our rates to help you decide.