What is a personal loan?

What is a personal loan?

A personal loan is an unsecured loan which a customer takes out to spend on whatever they choose.  It can be used for anything from buying a car to going on holiday.  It usually has a fixed cost and a fixed period. If a personal loan is used to buy a car, then the loan attaches to the person and not the car. So, if the person defaults on their payments then the lender will pursue the person directly and could end in bankruptcy. Because a personal loan is not secured on the car, banks consider them more risky and for that reason personal loans are often the most expensive way to finance a car.

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