A line of credit is different from a loan in that a loan is a fixed sum of money repaid over a fixed term (period of time), and a line of credit is a revolving account a creditor can borrow against, withdrawing funds up to the maximum amount of the line of credit, and paying-down the line of credit at any time, with the balance fluctuating over time. Thus, a line of credit is more similar to a credit card account, but is usually provided by a local bank based on the debtor’s personal or business relationship with the bank.

In Iowa, as in other states, a line of credit and a loan are distinct financial products. A loan in Iowa is a specific amount of money borrowed that must be repaid over a set period, often with fixed payments. In contrast, a line of credit is a flexible borrowing option where the borrower is approved for a maximum amount and can draw funds up to that limit as needed. The borrower can then repay and re-borrow funds within the line of credit's terms. This arrangement is indeed akin to a credit card, where the balance can fluctuate, and payments vary based on the amount borrowed at any given time. Lines of credit in Iowa may be offered by local banks and are often based on personal or business relationships with the bank. The terms of lines of credit, including interest rates and repayment conditions, are governed by state statutes and federal laws, such as the Truth in Lending Act (TILA), which requires lenders to disclose credit terms to consumers in a clear manner.