What Is a Personal Loan?
A personal loan is an installment loan that provides a lump sum repaid in fixed monthly payments over a set term, often two to seven years. Most personal loans are unsecured and can be used for many purposes. The cost depends on the interest rate, any origination fee, and the term.
Personal Loan vs. Credit Card
A personal loan has a fixed payoff date and usually a fixed rate. A credit card is revolving credit: the balance can be borrowed again after repayment, and there is no fixed end date.
Calculating the Payment
The monthly payment follows the standard amortization formula based on the amount, rate, and number of months.
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🔗 Related Terms
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Last updated: September 27, 2026. This definition is for general educational purposes only. It is not financial, investment, tax, legal, or medical advice, and it does not recommend any product or course of action. For decisions about your own situation, consult a qualified professional.