Line of Credit Calculator

A loan gives you a lump sum upfront that you repay in fixed installments. A line of credit is a revolving facility — you can draw funds as needed up to your limit, repay, and borrow again. You only pay interest on the amount you have actually drawn, not the full credit limit. Lines of credit are ideal for ongoing or unpredictable expenses, while loans work best for one-time costs with a clear repayment schedule.

A HELOC (Home Equity Line of Credit) uses your home equity as collateral. It typically has a draw period (5–10 years) where you can borrow and make interest-only payments, followed by a repayment period (10–20 years) where you pay back principal plus interest. HELOCs usually have variable rates tied to the prime rate. They are popular for home improvements, debt consolidation, and large expenses because rates are lower than unsecured credit.

Absolutely. Lines of credit often have low minimum payments (sometimes interest-only), which means you could carry the balance for years. Paying more than the minimum reduces your balance faster, cuts total interest, and frees up available credit. For example, on a $20,000 balance at 8%, paying $500/month pays it off in about 44 months with $1,700 in interest. At $300/month, it takes 80 months and costs $3,700 in interest.

Yes. A line of credit affects your score through utilization ratio (the percentage of your limit that you are using), payment history (making payments on time boosts your score), and credit mix. Keeping utilization below 30% is generally recommended — on a $50,000 line, that means keeping the balance under $15,000. Opening a new line of credit creates a hard inquiry and may temporarily lower your score.