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 Vermont, as in other states, a line of credit and a loan are distinct financial products. A loan in Vermont is a specific amount of money borrowed that must be repaid over a predetermined period, often with interest, according to the terms of the loan agreement. In contrast, a line of credit is a flexible borrowing option that allows a debtor to draw funds up to a certain limit, repay them, and borrow again as needed. The balance can go up or down over time, depending on the borrower's use and repayments. This flexibility makes a line of credit similar to a credit card. Vermont banks and financial institutions may offer lines of credit to individuals or businesses based on their creditworthiness and relationship with the bank. The terms of a line of credit, including interest rates, repayment schedules, and fees, are governed by the agreement between the borrower and the financial institution. It's important for Vermont residents to understand the terms and conditions of any credit agreement before entering into one.