A personal loan is a type of borrowing where an individual borrows money from a financial institution, such as a bank or credit union. The funds can be used for any purpose, including paying off high-interest debt, making home improvements, buying a car, or taking a vacation. Personal loans are typically unsecured, meaning they don't require collateral like a house or car. Instead, the lender bases their decision on factors such as your credit score and income to determine whether you qualify for the loan and how much interest you will pay. The repayment term is usually between 1-5 years, with fixed monthly payments that include both principal and interest. Personal loans can be a good option for those who need money quickly or don't want to use their home as collateral. However, they also come with higher interest rates than other types of borrowing, so it’s important to carefully consider your options before taking out a personal loan.