What is Personal Loans.

By Eric Morris

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A personal loan is a type of debt which is made for personal, family, or household use, and which is neither a business loan nor a long-term mortgage loan. The lender loans money to the borrowers. The borrowers pay back this amount, usually but not always in regular installments. This service is generally provided at a cost, which is referred to as interest on the debt.

With a personal loan one can meet his financial requirements. Be it any ceremony in the family, a surprise gift or a grand vacation, personal loans provide a helping hand. The personal loan helps to take care of all kinds of expenses in a short time period. This type of loan usually covers travel expenses, holiday expenses, medical expenses, marriage expenses, honeymoon expenses or any other personal type expenses.

Personal loans can be divided into two types: secured loans and unsecured loans. A personal loan can either be secured against property or unsecured, depending on your personal circumstances and preferences. A secured personal loan is a loan which is secured by collateral. Secured personal loans are appropriate for raising a very large amount. These types of loans are easy to get; even a person with a poor credit history can get a secured personal loan. Opposite of this, an unsecured personal loan is a loan which is not secured against any collateral. In such cases the lender has no right to claim the borrower's property if the borrower fails to repay. Since the lender is relying only on the borrower’s ability to meet the repayments, these types of loans are difficult to get.

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