Library of Congress Federal Credit Union

Which Option Is Right for You?
Choosing between a home equity line of credit (HELOC) and a personal loan depends on your needs, timeline, and financial situation. We’ll provide information to help you make the best choice on what works best for you.

What Is a PERSONAL LOAN?
A personal loan is a lump sum of money you borrow from a lender, then repay in fixed monthly installments—typically over 1 to 5 years. These loans are usually unsecured, meaning no collateral is required.

Personal Loan PROs:

• Fixed Rate and payment amount 
• Quick processing time (usually 24 hours or less)       
• No Collateral required        

Personal Loan CONs:

• Generally has a higher interest rate 
• No borrowing flexibility – all funds disbursed at one time        

What Is a HELOC (Home Equity Line of Credit)?
A HELOC — pronounced “He-Lock” — lets you borrow against the equity you’ve built up in your home. It’s one of the financial advantages of homeownership, offering access to low-interest credit based on your home’s value.

Unlike a personal loan, a HELOC works more like a credit card: you’re given a revolving line of credit up to a set limit, and you can borrow as needed over time. This makes it ideal for ongoing expenses like home improvements or education costs.

HELOC PROs:

• Establish a revolving line and borrow only what you need 
• Higher borrowing limits       
• May have tax advantages        

HELOC CONs:

• Longer processing time 
• Requires home as collateral
• Variable rates/payments        

Still want help choosing what’s best for you? Contact us, call or email — we’re here to help you find the best solution.