The right product depends on how the cost arrives and how you plan to repay. The table compares the 3.
| Point | Line of credit | Term loan | Credit card |
|---|
| How you get the money | Draw as needed, up to a limit | Full amount on day 1 | Spend up to a limit |
| Interest | Only on the amount drawn | On the full amount from day 1 | None if paid in full by the due date; high if a balance is carried |
| Repayment | Instalments, with the option to repay and redraw | Fixed instalments over a set tenure | Minimum due each month |
| Suits | Costs that arrive in stages | A single, known cost | Day-to-day spending cleared each month |
Last updated: 27th October, 2026
A line of credit is not automatically cheaper. Its rate may differ from a term loan's, and some products carry a maintenance charge, so compare the full cost in the Key Fact Statement against how you expect to use the limit.
Vivek's staged fees
Vivek, 37, leads automotive design at a Pune firm, with Rs. 83,000 in monthly salary and a CIBIL score of 772. His wife's executive MBA fees of Rs. 2.4 lakh were due in 4 instalments over a year, which suited a line of credit. Before choosing, he priced a term loan for the full amount at an illustrative 14.25% per annum, with the equated monthly instalment (EMI) worked out for 24 and 36 months.
EMI = P × R × (1 + R)^N ÷ [(1 + R)^N − 1]. Here P = Rs. 2,40,000, R = 14.25 ÷ 1,200 and N = months.
| Tenure | Monthly EMI (Rs.) | Total interest (Rs.) | EMI as share of salary (%) |
|---|
| 24 months (2 years) | 11,551 | 37,235 | 13.9 |
| 36 months (3 years) | 8,232 | 56,345 | 9.9 |
Last updated: 27th October, 2026
A term loan would have charged interest on the whole Rs. 2.4 lakh from day 1. By drawing each fee instalment only when it fell due, Vivek paid interest on a much smaller balance in the first year. Processing on either route would cost up to Rs. 9,912, so the line of credit saved on interest alone.
What can delay approval: a CIBIL score below 650 or existing EMIs that take up a large share of your income. Names or addresses that do not match across documents, and more than one loan application in the same month, can also slow it down.
Costs arriving in stages? With a Bajaj Finance Personal Loan, you can borrow Rs. 40,000 to Rs. 75 lakh, subject to eligibility. Check your loan offer with your phone number and a one-time password (OTP) → apply online → receive funds within 24 hours* of approval.
