InvestorQ : What is a personal loan?
Ashoka Patkar made post

What is a personal loan?

Pratik vyas answered.
3 years ago
A personal loan, in simple terms, is an unsecured loan that is taken by an individual rom a bank or a non-banking financial company (NBFC) to meet their personal needs.
Unlike a home or a car loan, a personal loan is not secured against any asset. This means that you don’t have to give any collateral to the lender (bank/NBFC) and in case of a default, the lender cannot auction anything you own.
As the lender doesn’t hold any collateral against the amount it loans to you, the interest rates on personal loans are higher than those on home, car or gold loans because of the greater perceived risk when sanctioning them.
The criteria on which a personal loan can be given are: income level, credit and employment history, repayment capacity, etc.