A personal loan is a type of unsecured loan that you can use for various purposes, such as consolidating debt, paying for medical expenses, making home improvements, or even financing a large purchase. Unlike an auto loan or mortgage, a personal loan does not require collateral (like a house or car) to secure the loan, which is why it’s considered unsecured.

Here are some key features of personal loans:

1. Loan Amount: The amount you can borrow depends on the lender, your creditworthiness, and your income. It can range from a few hundred to tens of thousands of dollars.
2. Interest Rate: Personal loans usually come with fixed or variable interest rates. The rate you receive will depend on factors like your credit score, income, and the lender’s terms.
3. Repayment Terms: Personal loans typically have a set repayment period, which can range from 1 to 7 years. You will repay the loan in equal monthly installments until the loan is paid off.
4. No Collateral: Since personal loans are unsecured, you don’t need to put up any property or assets as collateral. This makes them riskier for the lender, so the interest rates can be higher compared to secured loans.
5. Approval Process: Lenders will evaluate your credit score, income, and debt-to-income ratio to determine if you qualify for the loan and what interest rate you’ll receive.
6. Use of Funds: You can typically use a personal loan for anything, but some lenders may restrict certain uses (e.g., gambling, education expenses, or investing).