At some point in time, you may find yourself needing financial assistance to help you navigate life. Whether it’s to complete a home repair, finance a family getaway, or pay for an unexpected medical expense, a personal loan may be your best option. You might also consider a personal loan to consolidate existing debt into a single payment with a lower interest rate.
Depending on your needs, a signature loan, line of credit, or consolidation loan could be the best option given your unique circumstances. While each provides access to funds, they work very differently. Here’s what you need to know about each option:
Signature Loan
A signature loan from Metro Credit Union is a fast and easy way to get funds and does not require any collateral to open. This type of loan can be used for a variety of expenses with a wide range of rates and terms available to fit your financial needs.
Debt Consolidation
Credit cards are convenient to use, but if you find yourself struggling to make multiple credit card payments each month, you might want to consider consolidating your debt. When you convert credit card debt to a personal loan, you may pay less in interest, and you have a fixed repayment period while making a single payment for multiple credit card debts.
Line of Credit
A line of credit is a preset borrowing limit that can be tapped into at any time. You can take money out as needed until the limit is reached, and as money is repaid, it can be borrowed again in the case of an open line of credit.
Your Credit Score
When applying for a personal loan, the first thing that matters is your credit score. Just like a report card describes what kind of student you were, your credit score tells credit unions what type of borrower you are. It indicates how well you’ve repaid loans in the past and how likely you are to repay a loan in the future. Your credit score can determine not only whether you get a loan but also how much you pay in interest. A better credit score can save you hundreds or even thousands of dollars in interest. Each quarter, we provide our members with updates on their FICO® Score, and you can access it via online banking under the tools section.
Quick Comparison: Which Option Fits
Option | Best For | How You Get Money | How You Repay |
Signature Loan | One-time expense or planned purchase (repair, trip, medical bill). | Your receive a lump sum up front. | Fixed monthly payments over a set term. |
Debt Consolidation Loan | Turning multiple credit card payments into one payment, often with a fixed payoff timeline. | The loans is used to pay off existing balances. | One fixed monthly payment over a set term. |
Line of Credit | Ongoing or unpredictable expenses where you want flexible access to funds. | You borrow what you need, when you need it, up to a preset limit. | Payments vary based on what you borrow and repay; as you pay it down, funds can become available again. |
Questions to Ask Before Choosing a Personal Loan
Do I need a lump sum or flexible access to funds?
If you need money all at once, a signature loan or consolidation loan is usually the fit. If you want to borrow in smaller amounts over time, consider a line of credit.
Is my main goal to simplify credit card payments?
If yes, debt consolidation can turn multiple payments into one fixed payment with a set repayment period.
Do I want a set payoff date?
If you want a clear end date and predictable payments, a signature loan or consolidation loan is usually easier to budget for.
Will I need to borrow again after I repay some of it?
If yes, a line of credit may make sense because you can borrow, repay, and borrow again up to the limit.
Do I want a loan that does not require collateral?
Metro’s signature loan is described here as not requiring collateral.
How much will my credit score affect my options?
Your credit score is a major factor in approval and interest rate, and a better score can reduce the total interest you pay.
What is the simplest way to choose?
Match the tool to the need: one-time expense, signature loan; simplify credit card debt, consolidation; ongoing flexibility, line of credit.
To help you understand what type of loan will meet your unique needs, visit our Resources page at metrofcu.org where you can find links to financial calculators, blogs, member education tools, and Save and Succeed, Metro’s personal finance program. Once you’re ready to move forward, visit our Personal Loans webpage and click Apply Now.
