Line of Credit (LOC) Personal Loans

A LOC is where a bank approves you for a loan that you can use as you need to. This way whenever you need a loan, the approval will already be there waiting for you. Furthermore, you can borrow against the LOC -- without having to fill out another application and go through another credit review -- until you reach the limit. So, you can apply for a $10,000 LOC in July, use $2,500 of it in August, $5,000 in September, and $2,500 in April instead of applying for three separate loans. You are free to use all or none of the line.

Debt Consolidation Personal Loans

A debt consolidation personal loan allows you to take out a loan to consolidate your current bills. This is a popular way for consumers who have too much outstanding debt on several cards to get all of their debt under one lower interest rate, deal with only one monthly payment, and free up their revolving lines. A debt consolidation loan is good for anyone who wants to accomplish any of these three goals. Remember, however, don't free up your revolving lines just to dig yourself further into debt. If you are having money mismanagement issues, it is better to consolidate your debt with a non-profit credit counseling service.

Person-to-Person Loans

Having trouble getting a personal loan through a bank or think that you are being offered an unfair interest rate? The world of person-to-person lending may open a new door for you. Person-to-person lending is just like asking someone you know for a loan, who also has the ability to lend like a bank. It is strangers lending to strangers with an interest rate, minimum monthly payment, fixed terms, and access to collection assistance just like a bank. The difference is that, unlike a bank, a person who is lending to you has the opportunity to hear your story and decide whether you are worthy of a loan or a lower interest rate -- no matter what your credit score says. There are only one or two places so far where you can do this, but the popularity of these person-to-person lending marketplaces has grown considerably with both borrowers AND lenders.

'Finance' Company Personal Loans

'Finance' companies specialize in lending to those who are high-risk. These loans often have very unfavorable interest rates, fees, and loan amounts. They are also looked down upon by your FICO credit score (although this may soon change) and other lenders (major banks in particular). Payday loan companies, title loan companies, and sub-prime personal loan companies would all fall into this category. These are only good for those who need a small emergency loan that they can pay back quickly to a company who does not report to credit reporting agencies as long as the loan is paid within terms.

No matter what you plan to use your personal loan for, make sure that you get a decent deal so that you are not paying more than you need to. Also, make sure you know your credit scores and what kind of interest rate you should expect to be offered with those scores.