A personal loan lets people borrow money for a set amount of time (known as the loan term), and pay it back in monthly payments. You can fill out an online application for a personal loan or you can apply in person. Many lenders will allow you to check your eligibility online before you apply for the loan and check your estimated interest rate. The rate estimate can be different from the actual rate of the loan.
Usually, a personal loan is considered an unsecured loan, meaning there is no asset/property that can be taken away by the lender if the borrower does not pay.
By contrast, if a borrower takes out a mortgage or an auto loan, those are considered secured loans. These types of loans require collateral that can be used as payment if the borrower doesn’t pay.
A line of credit is a more flexible loan, and it’s typically used for recurring business expenses and not one-time purchases. If you’d like to learn more about lines of credit, this Investopedia article may be helpful.
Term loans are personal loans that give a lump sum of cash and require a large down payment. These types of personal loans are usually used for small businesses and you can learn more about them on Investopedia.
If you take out a personal loan directly from a bank or financial institution it is considered a direct loan.