Installment Loan or Line of Credit?

Our legal expert examines for you the advantages and disadvantages of these two financial instruments so that you can choose the one that best suits your budget. And your repayment capacity. Choose the formula that suits you best with the expert advice of our legal expert. Discover the Installment Loan or Line of Credit.

How to choose between the Installment Loan or Line of Credit?

The Installment Loan

For example, if you are financing renovation work in your house.

• You pay in periodic installments, generally every month;
• The payment terms are fixed throughout the duration of the contract;
• You do not have the possibility to withdraw new credits;
• The interest is known prior to the conclusion of the contract;

The Line of Credit

For example, a VISA card or a store card in a large retail chain.

• You are free to repay whenever you wish;
• The payment terms are irregular;
• You have the possibility to make new withdrawals up to the amount of the repayments made and within the limits of the granted credit amount;
• The interest rate is calculated based on the actual use of the credit;

In conclusion

Finally, opting for one type of credit or the other will depend on the purpose of your credit. Although it may seem that you have more freedom of use with a line of credit, the additional fees can be higher with a credit card. In any case, the installment loan is very secure as it is based on a very precise contractual document. Which protects consumers and you know exactly in advance how much you pay monthly as well as the total cost of the credit.