Personal Loan

A personal loan is unsecured — you don't pledge any asset as collateral — which is why lenders charge noticeably higher interest rates than secured loans like home or car loans, to offset their higher risk. People typically use personal loans for things like medical expenses, weddings, travel, or consolidating other debt. Because there's no collateral backing the loan, lenders also prefer shorter repayment periods to reduce their exposure. All rates here are reducing-balance (diminishing) rates — interest is charged each month only on what you still owe, which is how banks quote home, car and personal loans. If a dealer or lender quotes a "flat rate", it is NOT the same thing and is usually much more expensive than it looks — use the Flat vs Reducing Rate converter to compare.