A personal loan is when you are lent money from a lender, normally a bank or building society. There are two typres of personal loan - a secured personal loan and an unsecured personal loan.

A secured personal loan is one where the money is secured against an asset, usually property. This means that if you default on the loan (ie you do not keep up with the loan payments), the property can be repossessed and sold to recoup the lenders costs.

An unsecured personal loan is one where money is not secured against anything. For an unsecured loan, you typically have to have a fairly good credit history. If you do not have a good credit history, you will probably end up having to take a loan with a higher rate of interest because you are deemed a higher risk than someone who has a good credit history.

Personal loans can be taken for any number of reasons. Some of the most popular reasons for taking out a personal loan are:
- to consolidate existing debts
- to buy a new car
- to go on an exotic holiday
- to finance or purchase some goods eg for the house

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