Personal loans are loans that you can avail to pay for any of your expenses. When you apply for a loan, you do not have to cite any reason for availing it. With the money in hand, you have a freedom to spend on anything you want to. However, it is recommended that a personal loan must not be used to pay for daily expenses.

There are several benefits offered by these loans. Many lenders do not give loans unless the borrower has a good credit history. Once you avail a loan and repay it as per the repayment terms, you tend to start on the way of acquiring a good credit rating. Another benefit of availing this loan is debt consolidation. If you have a taken a number of loans, you may avail a personal loan to consolidate your loans into one manageable loan.

The rate of interest on personal loans varies considerably. The rate of interest on secured personal loans is lower than the rate on unsecured personal loans. Secured personal loans are less risky for lenders because they are given against collateral. The high rate of interest on unsecured personal loans compensates for the risk that is associated with such loans. Personal loans carry two types of interest rates