HELOC vs. Personal Loan: The 2026 Rate Showdown

Secured vs. Unsecured Debt

When you need $20,000 fast, your mailbox is likely full of "Personal Loan" offers. They promise funding in 24 hours with no appraisal. It sounds tempting compared to the 30-day process of getting a HELOC. But that convenience comes at a massive price.

The Interest Rate Gap

Personal Loans are Unsecured. If you stop paying, the lender can only annoy you with phone calls. They can't take your house. Because of this high risk, rates in 2026 average 12% to 25%.

HELOCs are Secured. If you stop paying, the bank takes your home. Because the risk to the bank is low, rates average 8% to 10%.

The Math on $30,000 Debt

• Personal Loan (15% Rate, 5 Years): Payment = $713/mo. Total Interest = $12,800.
• HELOC (9% Rate, 5 Years): Payment = $622/mo. Total Interest = $7,300.

Result: Being patient enough to get a HELOC saves you $5,500.

When a Personal Loan Wins

Despite the cost, personal loans have a place:

• Speed: If you need money tomorrow for an emergency, HELOCs simply can't compete.
• No Equity: If you just bought your home and have 0% equity, a personal loan is your only option.
• Small Amounts: Banks rarely issue HELOCs under $15k. For a $5k expense, use a personal loan or credit card.

Tax Deductibility

Here is the final nail in the coffin: Personal loan interest is never tax-deductible. HELOC interest is deductible if used for home improvements. This widens the savings gap even further.