Same Goal, Very Different Structures
Both HELOCs and personal loans can consolidate multiple debts into a single payment. But the mechanics, risks, and ideal use cases are distinct enough that choosing the wrong one can cost thousands — or put your home at risk.
HELOC: The Revolving Option
A Home Equity Line of Credit works like a credit card secured by your house. You get a credit limit based on equity, draw what you need, and pay interest only on what you borrow. Rates are variable, currently 8–10%, with a 5–10 year draw period. The appeal is flexibility and lower rates. The risk: your home is collateral. Can't repay? The lender can foreclose. Variable rates also mean payments can increase.
Personal Loan: The Fixed Option
An unsecured personal loan gives you a lump sum at a fixed rate with a fixed monthly payment over 2–7 years. Rates range from 6–36% depending on credit. No collateral required. Upstart and similar lenders use alternative data beyond credit score to set rates, which can benefit borrowers with thin credit files but strong income.
Running the Comparison
The Consolidation Calculator on DebtCalc makes this concrete. Enter your existing debts, then model two scenarios: HELOC at your quoted rate and personal loan at your offer rate. Compare total interest, monthly payment, and payoff timeline. A HELOC makes sense when debt is large (over $25,000), you have substantial equity, and you're comfortable with rate variability. A personal loan is better for smaller amounts or when you want certainty.
The Honest Risk Assessment
The question isn't just which saves the most interest. A HELOC that saves $3,000 but puts your house at risk isn't automatically better. A personal loan with a slightly higher rate and zero collateral risk might let you sleep better — and that's worth something.