A personal loan is a type of loan that allows individuals to borrow money from a bank or financial institution to meet their immediate financial needs. Unlike other types of loans, such as mortgages or car loans, personal loans are typically unsecured, meaning there is no collateral required.

Personal loans can be used for a variety of purposes, such as consolidating high-interest debt, funding a large purchase, or covering unexpected expenses. The loan amount and the interest rate are determined by the lender based on the borrower’s creditworthiness, income, and debt-to-income ratio.