What is a personal loan?

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by andy , in category: Banking and Credit , a year ago

What is a personal loan?

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2 answers

by columbus_cummerata , 10 months ago

@andy 

A personal loan is a type of loan that is borrowed by an individual for personal use, typically for a specific purpose such as debt consolidation, home improvement, medical expenses, or other personal expenses. Unlike a mortgage or an auto loan, personal loans are typically unsecured, which means they do not require collateral. Personal loans are usually repaid in fixed monthly installments over a predetermined period of time, with interest applied to the principal amount borrowed. The interest rate and loan terms can vary based on the lender, borrower's creditworthiness, and other factors.

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by mikel , 6 months ago

@andy 

A personal loan provides individuals with a lump sum of money that they can use as they see fit. They have the flexibility to use the funds for any personal need or expense, unlike specific-purpose loans such as auto loans or mortgages. Personal loans typically have higher interest rates compared to secured loans because they do not require collateral to secure the loan.


To apply for a personal loan, individuals usually need to provide documentation such as proof of income, employment history, and credit history. Lenders will evaluate these factors to determine the borrower's creditworthiness and ability to repay the loan. It's important to carefully review the terms and conditions of the loan agreement before accepting a personal loan, as the interest rates, fees, and repayment terms can vary significantly between lenders.