A personal loan is sometimes referred to as universal credit. This is due to the fact that it has variations in the amount and term of the loan. For example, you can borrow $1,000 for five months or $20,000 for 24 months. A personal loan can be used for any purpose without explaining it to the lender. All you need is to apply for a loan and make monthly payments on time.
People commonly use personal loans for vacations, weddings, emergencies, medical treatment, home renovations, debt consolidation, etc. They can be used for just about anything except for a college education or illegal activities.
Personal loans can be both secured and unsecured.
Unsecured personal loan differs from other loan products by not requiring collateral. This is convenient because not everyone has the right property for collateral. Plus, not everyone can provide collateral due to the psychological factor and the fear of losing it, even if they are able to pay off the loan. At the same time, interest rates for an unsecured loan are usually slightly higher than for a secured one. The difference will not be too significant for those with a good credit history. But for those whose credit score is not good enough for the lender, a personal unsecured loan will be an order of magnitude more expensive, if available.
Secured personal loans require collateral. This is a reasonably good loan. Usually, the interest rates on a secured loan are lower than on an unsecured one. Also, such loans are available to those with a poor or bad credit history. All you need is what you provide as collateral - a house, a car, securities, or a savings account. And, of course, be sure you will pay off the loan and not lose your property.
Applying for a personal loan is easy. This can usually be done online through a bank, credit union, or online lender.