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What Kind of Loan is Best for You?

When you're shopping for a loan, you may feel as though you're drowning in information. Loans, lines of credit, variable rates, fixed rates . . . it may seem difficult to pick the product that's best for you.

At Dollar Bank, we're here to help you make the right decision. Our lending officers will be happy to review all of your options and help you to select the loan that will work for you, now and in the future.

Installment Loan or Line of Credit?

You may wonder which is better for you, an installment loan or a line of credit. It all depends on your particular borrowing needs.

When Do You Need a Line of Credit?

Above all else, a line of credit offers flexibility. It gives you the opportunity to borrow again and again without reapplying. Borrow as much or as little of your line of credit as you need, whenever you need it.

Of course, this means that the amount you owe can increase or decrease based on whether you've borrowed again or simply made your regular payments. That's why it's wise to consider your spending and credit habits before taking out a line of credit. If you have a history of fiscal responsibility and prudent borrowing, a line of credit gives you the freedom to manage your finances.

Let's say you're remodeling your kitchen and the job will take several months. A line of credit will let you pay the bills - wiring, appliances, wallpaper, cabinet installation - as they are due. Or perhaps you have a child in college and will be making tuition payments over a period of years. With a line of credit, all you need to do is write a check. Of course, you'll want to make sure that your credit limit is high enough to cover your projected needs.

A line of credit is also valuable in the event of an unexpected expense such as car repairs or medical bills. It can act as a safety net to get you through an occasional tight period.

When is an Installment Loan Better?

If you have a one-time borrowing need, and prefer an uncomplicated borrowing option, an installment loan is probably your best bet. Once you receive the check for the loan amount, your borrowing is complete. You simply begin to make your payments and continue making them until the balance is paid off. Your payment will remain the same throughout the term for easy budgeting.

Many borrowers prefer the simplicity of this arrangement. For a new or used car, home improvements or a special event such as a wedding, an installment loan gets you the money you need and a payment schedule you can afford.

Quick Comparison

Review the following chart for an idea of whether a loan or line of credit is best for you.

Feature Loan Line of Credit
Check Access No Yes
Future Borrowing No Yes
Debt Consolidation Yes Yes
Interest Rate Fixed Variable
Use in Emergency No Yes
Flexible No Yes
One-Time Borrowing Yes No

 

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