There are several types of personal loan that an individual can borrow from both traditional and alternative money lender. They are small business loan, installment loan, short term personal loan, secured and unsecured loan, home equity loan, and home equity line of credit.
Small Business loan; Installment Loan; & Short Term Personal Loan
Small business loan is usually for people who would just want to set up a small business to help increase their income. These businesses are usually in the area of retail trade. Loans for small businesses are released only after the borrower has developed and presented a business plan, have acquired licenses for the business, and performed other necessary business task. Installment loans are personal loans whose repayment terms last for several months. The loans repayment is amortized by the borrower and paid usually at the end of each month. Short-term personal loan is somewhat like an installment loan except that repayments terms usually take several years to finish.
Secured and Unsecured Loan; Home Equity Personal Loan
Secured loans are those where the lenders require the borrower to put up collateral while the unsecured one does not. The main difference between the two is that the loan amount from secured loans has less interest levied in them. Home equity loan is a fixed amount cash to be used for home improvements, to purchase properties, for educational loan assistance or to be used to consolidate other debts of the borrower. The reason for it being referred to as home equity personal loan is because the borrower needs to secure the loan by using his or her property as collateral.
Home Equity Line of Credit
Home equity line of credit also known as HELOC is a type of personal loan that allows the borrower to have a credit line similar to that of the credit card. The loan allows you to get the money from the credit line but only up to the maximum amount granted by the lender. The beneficiary of the loan can simply write a check whenever he or she needs cash. This type of loan is usually used for renovation of home and other properties.