A Beginner’s Guide To Personal Loan Vs Line Of Credit in Singapore

People who want to borrow money in Singapore have a wide array of choices. Because of this, deciding what financing option to get can be overwhelming and confusing. If you’re choosing between a personal loan vs line of Credit, you’re on the right page.

Personal loans and lines of credit have their own sets of advantages and disadvantages. Examining these will enable you to make the right choice between the two. If not, you could be stuck in a tricky financial situation.

Ready to learn more about line of credit vs personal loan? Keep on reading.

Here At OMY, You Will Discover The Following:

What Is A Personal Loan?

Personal Loan Vs Line Of Credit

A personal loan is a type of credit given to borrowers as a lump sum. This personal cash loan can be used to pay for anything such as weddings, vacation, medical bills, home renovations, and even emergencies.

A lot of people apply for a personal loan as a form of debt consolidation. For example, it can be used to take care of a credit card balance that has a high interest. By taking out a personal loan, borrowers can save thanks to its low interest.

In addition, there are personal loan applications that can be approved in just minutes by licensed moneylenders. You can obtain a personal loan quickly, if you want one.

What Is Line Of Credit?

Line Of Credit In Singapore

A line of credit doesn’t work the same way as a personal loan. When a person is approved for line of credit, a financial institution or bank assigns them a specific credit limit that they can use in whole or in parts.

Considering this, it becomes a revolving credit limit so it’s more flexible. Just like loans, a line of credit can also be used for any purpose since it operates like a credit card or checking account.

What Makes Personal Loan Vs Line Of Credit Different?

Take a look at this table below to get a quick side-by-side look at its differences.

Personal Loan Line Of Credit
  • Upfront lump sum
  • Fixed/variable interest rate depending on the lender
  • 1-7 years loan term
  • Flexible withdrawals
  • No fixed repayments
  • Interest rate is only charged on the amount you withdrew

Fund Disbursement

Personal loan and line of credit work differently in terms of disbursement. Both personal loan and line of credit can be gotten in a lump sum. However, only a line of credit can be used in parts.

Loan Term

Most personal loans follow a fixed-term agreement. This usually falls between 1 to 7 years. By the end of the term, it should be paid back in full with interest.

Meanwhile, a line of credit does not come with a set term. The funds you borrow will be available again after you repay it plus interest.


Both personal loan and line of credit involve monthly repayment. However, the amount you must pay in a line of credit only depends on your withdrawn amount plus interest. On the other hand, personal loans can have fixed or floating monthly interest. The latter depends on the market condition.


A line of credit typically charges annual services fees, whereas personal loans only charge processing fees. Keep in mind that depending on your lender of choice, you may be charged hidden fees so don’t forget to consider this.

When Should You Consider Getting A Personal Loan?

Now that you know what a personal loan in Singapore is, you’re probably wondering if it’s the right choice for you.

A personal loan can be extremely helpful for a wide variety of reasons. First, you have the freedom to use your money for anything. This is exactly why personal loans are so attractive to a lot of people.

This type of loan is great for the following reasons:

  • Major expenses
  • Home repairs
  • Debt consolidation

When you take out a personal loan, you can also enjoy the following benefits:

  • Fixed or floating interest rates/repayments
  • No collateral necessary
  • Low-interest rates

Just like other types of financing, your credit score will greatly impact the terms and interest rate of your personal loan.

More From OMY: Best Licensed Moneylenders In Singapore

When Should You Consider Getting A Line Of Credit?

A line of credit Singapore is a flexible borrowing option that is great for people who do not know how much money they need to finance something. Considering this, a line of credit may be beneficial for the following:

  • Home renovation projects
  • Ongoing projects where you don’t know the cost

People who have variable incomes can also take advantage of lines of credit to cover gaps in their expenses.

Getting a line of credit comes with these advantages:

  • Flexible borrowing options to cover expenses that are spread out over a certain period
  • Quick access to funds

Just like in personal loans, people with poor credit scores may have a hard time qualifying for this type of financing option.

More From OMY: Best Personal Loan for Low Income Earners in Singapore

A Word From OMY

You’re not the only one who is wondering if personal loan vs line of credit is better for them. Now that you know the similarities and differences between the two, you can finally make a more informed decision on which one to apply for to get the financing you need.

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