Difference between Personal Loan and Personal Line of credit

Personal Loan is often confused with the Personal lines of credit.

Lines of credit are often extended by banks, financial institutions and other licensed consumer lenders to creditworthy customers to address liquidity problems; such a line of credit is often called a personal line of credit. While a Personal Loan is an amount of money that one borrows from a financial institution like bank, or from the peers or from a

non-public lending company for personal use.

Personal loans can be utilized to fulfill certain personal needs. Buying a home, a vehicle, home repairs, education purpose, medical expenses etc. count under the personal loans.

Such loans can again be borrowed at secured and unsecured conditions. Secured loans are those where the lender asks for collateral that he might claim in case you fail to repay the lent amount. The unsecured loans do not ask for collaterals, but the rate of interest in such case is comparatively higher as the risk of non-payment is higher enough.

p2p lending sites

The concept of lending to peers isn't new. Family and friends have always lent each other some bucks without the involvement of a financial institution.

Bypassing the bank

All peer-to-peer sites have one important feature: They remove the role of a traditional bank in the lending process. Cutting out the bank reduces overhead, for one, which translates to better rates for borrowers and lenders,

All p2p lending sites have some sense of community. Instead of a bank deciding who will get funded, individual lenders make the call, paying attention not only to their expected returns but also the reasons borrowers are asking for funding.

Interested in borrowing some cash using a peer-to-peer site? The first step is picking which Web site is the best fit. "You need to understand the model you're utilizing in peer-to-peer lending. They all have nuances and differences,"  There's also a Facebook component, which allows users of the social networking tool to lend to their friends or find borrowers who belong to the same groups or networks.

Bypassing the bank to get higher returns

Peer to Peer Lending (P2P Lending) is a new way to lend and borrow money online with others.
Think “I got a loan, online” (for borrowers) and “I just became a banker” (for lenders) – and…. you begin to see.
Where do these models eventually lead? Towards an online “digital financial network” – managed by you and me.

•    Borrowers receive bank-competitive interest rates and lenders can yield bank-like returns on invested funds.
•    Thousands of individuals lend as little as $25 per borrower. You don’t have to “know” anyone to receive a loan.
•    Privacy, security, and legal compliance are built in. More than $500 million in P2P personal loans issued to date.
•    P2P Loans are a new portfolio asset class. Diversify by investing into large pools of FICO pre-qualified borrowers.
•    P2P allows Social Lending: You may opt to transact with friends and family to foster a generational wealth effect.