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I cannot understand what a protected-equity loan is and how it is different from an equity loan. Please keep your explanation layman and easy to understand.

It's a research question for class, for high school. We are taught that there are five main ways for credit-financing:

  1. Credit cards
  2. Overdrafts
  3. Hire & Purchasing
  4. Leasing
  5. Loans.

Now within Loans, there are:

  • Mortgage loans,
  • personal loan,
  • investment loan and
  • equity loan.

The important one for this question; equity loan's is where the your equity in a certain asset is held as a collateral for the loan For example, a home-equity loan.

But what I cannot understand is, what is a "Protected"-equity loan and how is it any different from a normal equity loan?

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  • In what context did you come across these terms? Feb 7, 2014 at 5:47
  • It's a research question for class, for high school. We are taught that there are five main ways for credit-financing: 1. Credit cards 2. Overdrafts 3. Hire & Purchasing 4. Leasing 5. Loans.
    – billy
    Feb 7, 2014 at 10:08
  • ... Now within Loans, there are Mortgage loans, personal loan, investment loan and equity loan. The important one for this question; equity loan's is where the your equity in a certain asset is held as a collateral for the loan For example, a home-equity loan. But what I cannot understand is, what is a "Protected"-equity loan and how is it any different from a normal equity loan?
    – billy
    Feb 7, 2014 at 10:15

1 Answer 1

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In simple terms :

Equity Loan is money borrowed from the bank to buy assets which can be houses , shares etc

Protected equity loan is commonly used in shares where you have a portfolio of shares and you set the minimum value the portfolio can fall to . Anything less than there may result in a sell off of the share to protect you from further capital losses.

This is a very brief explaination , which does not fully cover what Equity Loan && Protected Equity Loan really mean

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