At its most basic level, a personal loan is money borrowed from a lender for personal (rather than business) use, that’s to be repaid (with interest) in the future. For many, the need for a personal loan can come in an emergency, such as a tree branch breaking the roof, a flooded cellar or a broken-down vehicle. For others, a personal loan may be needed for planned repairs, debt consolidation or medical expenses. Even mortgages and car loans fall into the category of personal loans.
Common Uses for Personal Loans
Those with several credit card balances can choose to pay them all off with a personal loan in order to have a convenient single monthly payment. They may also be able to get a lower APR, enabling them to pay off the debt faster.
When you have unexpected expenses like heavy medical bills or expensive car repairs, personal loans may ease the burden of financial emergencies.
Instead of using the equity in your home to fund home improvement projects, personal loans are another option to get the funds you need.