Which is cheaper, a personal loan or a HELOC?
A HELOC is usually cheaper per dollar borrowed because it's secured by your home equity (typical APR 8-12% vs 10-25% for unsecured personal loans). A personal loan is faster to close (days vs 30-45 days) and doesn't put your home at risk. The right choice depends on amount, timeline, and your equity position.
Context
For borrowings under $15,000, a personal loan is almost always the right choice. The HELOC's APR advantage is small at this size and the closing costs (2-5% of credit line) eat the savings.
For borrowings $35,000-$100,000+, the HELOC's rate advantage compounds and the closing costs amortise across a larger loan. For homeowners with sufficient equity (above 20%) and time to close (30-45 days), the HELOC is usually cheaper.
The middle range ($15,000-$35,000) is the most situational. The HELOC's tax-deduction possibility (when used to substantially improve the home) can tip the math, as can your specific credit profile and the speed at which the project needs to start.
- Reviewed by
- Compliance Review
- Last reviewed
- May 22, 2026
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