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. However, like any other loan, defaulting on a personal loan is not good as it would reflect in your credit report and cause problems when you apply for credit cards or other loans in future.
As compared to a home loan or car loan, where the loan amount can only b used to buy a property or vehicle, a personal loan allows you the freedom to use the money in any way you want. A personal loan is an ‘unsecured loan’, meaning you are not required to provide any security to the lender in the form of cash, shares or any other assets. This might make it more attractive to some customers who may not be able to raise the cash required as collateral. A personal loan also referred to as consumer loan, is loan money granted to a person for any personal, household, business or commercial purpose. This kind of loan can be taken for any random reason varying from vacation to marriage and from fixing a refrigerator to pay somebody’s debt.