Personal loans are unsecured loans that can be used for a variety of purposes, including debt consolidation, financing a significant purchase, and covering unexpected costs.

Unlike secured loans, such as a mortgage or a car loan, personal loans don’t require collateral, which means the lender can’t seize your assets if you fail to repay the loan.

Instead, the lender relies on your creditworthiness and income to determine your eligibility for the loan and the interest rate you’ll be charged. Personal loans can have fixed or variable interest rates and terms ranging from a few months to several years.