Personal Loan Glossary

Closed-end Loans: You are given the loan amount in one lump sum and only allowed to use that amount. You may not pay some of it back and then take it out again for the duration of the loan. You get it once and pay it back.

Fixed Interest Rate: An interest rate that does not change for the duration of the loan.

Line of Credit (or Revolving Line of Credit): For a line of credit, you are given the loan amount you need and then pay it back by a specific time. It works like a credit card but with a time limit. You may have taken out $1,000 for 2 years. As you begin to pay it off and you need some back, you can borrow up to the $1,000 limit again, but for only those 2 years. Your interest rate is usually fixed for the time limit.

Secured Loan: A loan given to a person who is buying something worth collateral, such as a home or a car.

Unsecured Loan: A loan for an amount of money or something worth no collateral or security to an item, such as a credit card or a personal loan.