A personal loan is a type of unsecured loan that allows you to borrow money from a
financial institution for a variety of personal needs:
- What it is: A personal loan is a flexible financial instrument that
you can use to meet immediate needs, such as paying for medical bills, home
improvements, or debt consolidation.
- How it works: You borrow a fixed amount of money and repay it over
a set period of time, usually with interest.
- How it differs from other loans: Unlike a secured loan, a personal
loan doesn't require collateral, such as your car or home.
- How you apply: You apply for a loan, submit documents, and the bank
checks your credit worthiness.
- How you get the money: Once the loan is funded, the money is paid
to you, usually by direct deposit or check.
- How you repay the loan: You repay the loan according to the terms in your
loan agreement.
- How you can use the money: You can use the money for any legitimate
financial need.
- How it can affect your credit score: Late or missed repayments can
negatively impact your credit score.
Personal loans can be obtained from banks, credit unions, or online lenders. The criteria
for sanctioning a loan are mainly dependent on your income and credit score