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A personal loan is an unsecured debt, meaning you do not need collateral to take out a loan. It is usually a short-term loan that is usually given for 2-7 years. You can use a personal loan for almost anything and the most popular usage is for debt consolidation or for a large expense like home renovation, wedding and whatnot. However, personal loans are not usually given for education expenses.

Personal loans have a fixed repayment term and often carry a fixed interest rate. They are not like credit cards, which are revolving loans with no fixed payment term and variable rates. Personal loans are a type of instalment loan. When approved for a personal loan, you’ll receive a lump sum up front and then pay the money back, including interest, in regular monthly payments.