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 Maine, as in other states, a line of credit and a loan are distinct financial products. A loan in Maine is a specific amount of money borrowed that must be repaid over a predetermined 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 available credit replenishes as payments are made. Lines of credit can be secured or unsecured and are frequently offered by local banks, with terms based on the borrower's personal or business relationship with the bank. Maine's financial regulations, under the Maine Consumer Credit Code and other relevant statutes, govern the offering and management of lines of credit and loans, ensuring consumer protection and fair lending practices.