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Is a Personal Loan Better Than a PLOC?

11.13.2025 / Kylamarie Pinkinton - Manager, Consumer Lending Operations
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Life’s opportunities and unexpected costs don’t always wait until your bank account is perfectly positioned. When you're looking to pay down high-interest debt or need to bridge the gap for a larger goal like funding a wedding or paying for higher education, a personal loan can be an attractive, lower-interest alternative to credit cards. However, when it comes to covering unexpected emergency costs, your first line of defense should always be your Emergency Savings. If you haven't built one yet, you can learn how to get started here. When used strategically, a personal loan offers a structured way to finance your goals and improve your financial situation.

There are various uses for a personal loan or personal line of credit (PLOC). Whether you are looking to get out of credit card debt, take a vacation, or pay for a wedding, you may be curious which type of personal loan is best.

There are key differences between personal loans and personal lines of credit. Let us start by defining each one:

  • A personal loan is a fixed sum of money borrowed at once, with a fixed interest rate and a set repayment plan.
  • A personal line of credit is an amount of money with a set limit and a variable interest rate, that you can draw from as needed.

While personal loans and lines of credit can be useful financial tools to help you meet your goals, one may work better than the other depending on your situation.

Two questions to ask yourself are:

  • Can I pay for my expense in a single payment?
  • Do I know the full scope of my expenses up front?


The following table can help you better understand the key differences between personal loans and PLOCs:

Personal Loans   Personal Line of Credit
One time sum dispursement of loan funds Access to Funds Flexible access up to a credit limit
Fixed interest rate & payment Interest Rates & Payments Variable rate, interest paid only on borrowed amount
Set terms, usually monthly Repayment Schedule Montly payments on outstanding balance
May include fees (Ex: origination/prepayment) Fees May include fees such as annualand withdrawal
Best for large one-time expense Suitability Ideal for ongoing or variable expenses

When a Personal Loan May Be Best

Personal loans are most suitable for situations that require a lump sum of cash at one time. This can include paying for things like:

  • Wedding
  • Vacation
  • Medical bill
  • Consolidating high-interest credit card debt


Lower interest rates and set repayment plans make personal loans an attractive choice for a number of life’s expenses.

Pros and Cons of Personal Loans

Pros Cons
Lower interest rates than credit cards Some financial institutions may add origination fees
Fixed, predictable payment makes budgeting simple Limited payment flexibility until paid off
Quick access to funds, sometimes with same day Loan amount may not cover expenses

When a Personal Line of Credit May Be Best

A PLOC is often best suited for expenses that are unpredictable, ongoing or have uncertain amounts. These include but aren’t limited to:

  • Emergency expenses like car repairs or home repairs
  • Ongoing and uncertain home improvement costs where expenses are not fully known upfront
  • Quick access to cashflow
  • Short-term access to cash for time-sensitive investments

Personal lines of credit can be part of a sound financial strategy, helping you avoid dipping into savings and retirement accounts. When necessary, a PLOC can be treated as a rainy-day fund, as long as you are aware of interest and make on-time payments during the repayment period.

Pros and Cons of PLOCs

Financial flexibility, access to cash Variable rates & unpredictable payments
Only pay interest on borrowed amount Stricter eligibility requirements
Usually lower interest rates than credit cards Lower borrowing limits
No collateral needed Fees (depending on lender)
Minimum payment based only on outstanding balance More difficult to budget for

Creditworthiness and Debt-to-Income

Before considering or applying for a personal loan or PLOC, it is advisable to look at your debt-to-income ratio. Some lenders use this, among other factors, to determine your creditworthiness because it measures how much of your income goes towards debt payments each month and can be a key indicator of your financial health. Learn more about DTI and how to calculate yours.

Applying for Personal Loans and Lines of Credit in Florida

Florida’s usury laws limit the amount of simple interest a lender can charge on personal loans and lines of credit (among other types of loans). Compared to other states that have higher caps, or no cap, Florida’s usury limit of 18% simple interest may make personal loans more accessible and affordable for some applicants.

Before applying for a personal loan in Florida, shop around and check interest rates. You can save thousands of dollars over the life of the loan by having even a 1%-2% difference in the interest rate. However, if your priority is to keep the monthly payment within a range that is comfortable for your budget, then paying more over the life of the loan may not matter to you. It’s beneficial to understand your options and take out the loan that works for your financial strategy.

The Benefits of Personal Loans and PLOCs from Community First

Lending criteria differ from one financial institution to the next, and it’s important to understand the interest rate along with any additional fees before you sign your name on a personal loan or PLOC.

Advantages of a Personal Loan from Community First:

  • No origination or account fees
  • Competitive low rates
  • No payments for up to 90 days*
  • New members may be eligible for cash bonus offers when they also open a checking account!

Learn more about the Community First personal line of credit online or contact us today! These accounts also enjoy no origination or account fees, so you can enjoy more of the financial flexibility you’re looking for.

Federally insured by NCUA. All new accounts and loans are subject to approval and membership eligibility required. Please visit our website at communityfirstfl.org/connect/become-a-member or call 904.354.8537 for more information on membership requirements.

*Credit, income, and other restrictions apply. First payment may be deferred up to 90 days. Interest continues to accrue during deferred payment period. Deferring your payment will result in your having to pay higher total Finance Charges. Product offers, rates, terms, and conditions and other information provided here are subject to change without notice.

**All information contained in this blog is for informational purposes only. The credit union makes no representations as to the accuracy, completeness, suitability, or validity, of any information. The credit union is not responsible for any errors, omissions, or any losses, injuries, or damages arising from its display or use. All information is provided AS IS and with no warranties and confers no rights.

  The credit union is not responsible for material that is found through non-credit union links posted on this blog site. Ideas and strategies should never be used without first assessing your own personal and financial situation, or without consulting a financial professional.
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