What are Personal Loans?
These loans are short-term borrowing and are unsecured loans. In most lending structures, a person can get both secured and unsecured loans. The secure loans are against security or collateral. For example, if you apply for a mortgage, the bank will make lien on the property and hold it as security. In case you default on payments, the banks have the right to sell the security and recover its dues. So, in the secured loan, the lender is safe as he holds your collateral. There are also more options for secure loans where a person can borrow more capital and get better interest rates.
Personal loans are unsecured, and when you apply for these borrowing, you do not have to provide the lender with any security. These are short-term borrowing, and the amount is also up to a specific limit. You cannot get massive capital through a personal loan. Unlike a secured loan, since personal loans are unsecured, the lender will do a complete check of the applicant, especially the credit report, i.e., the history of the applicants on all previous borrowing. Personal loans also carry a higher interest rate.