Personal Loan
A personal loan is a type of unsecured loan that you can use for a variety of purposes. Unlike secured loans, such as a mortgage or auto loan, personal loans are not backed by collateral like your home or car. Instead, lenders approve personal loans based on factors like your creditworthiness, income, and credit history.
Here are some key characteristics of personal loans:
Unsecured: As mentioned, personal loans are unsecured, meaning you don't need to provide collateral to secure the loan. Lenders rely on your credit history and financial stability to assess your eligibility and determine the terms of the loan.
Fixed or variable interest rates: Personal loans can have fixed interest rates (the interest rate remains constant throughout the loan term) or variable interest rates (the interest rate can change over time). Fixed-rate loans offer predictable monthly payments, while variable-rate loans may have lower initial rates but come with the risk of rates increasing.
Repayment terms: Personal loans typically have fixed repayment terms, which can range from a few months to several years. Shorter loan terms often come with higher monthly payments but lower overall interest costs, while longer terms may have lower monthly payments but result in higher total interest paid.
