Learn about the types of personal loans available, before you borrow.

1. Unsecured personal loans

Unsecured personal loans are the most common type. They don't require collateral (like your car or home) and are typically used for purposes such as debt consolidation, holidays, or unexpected expenses. Interest rates are often fixed, and the loan term ranges from one to seven years.

2. Secured personal loans

Secured personal loans are backed by an asset, such as your car or savings account, which serves as collateral. These loans usually come with lower interest rates and more flexible terms. They are ideal if you have valuable assets to pledge and want to borrow a larger sum.

3. Fixed rate personal loans

Fixed-rate personal loans have an interest rate that remains constant throughout the loan term. This provides stability, making it easier to budget your monthly repayments. It's a suitable choice if you prefer predictability.
4. Variable rate personal loans

Variable-rate personal loans have interest rates that can fluctuate based on market conditions. They often offer more flexibility but come with a degree of uncertainty regarding future repayments. It can be an excellent option if you're comfortable with potential interest rate changes.

5. Line of credit personal loans

Line of credit loans function like a credit card, where you can access funds up to a pre-approved limit. You're only charged interest on the amount you borrow, making it a flexible option for various expenses. Be cautious about overspending.
6. Debt consolidation loans

Debt consolidation loans are used to combine multiple debts into a single loan, simplifying your finances and potentially lowering your overall interest rate. They can help you regain control of your financial situation.

7. Peer-to-peer (P2P) loans

P2P loans involve borrowing from individual investors or peers instead of traditional financial institutions. They are considered alternative lending.

8. Short-term personal loans

Short-term personal loans, often referred to as payday loans, are designed for quick, small loans to cover urgent expenses. However, they typically come with higher interest rates, so use them sparingly.