personal loans

• By definition, personal loans are a type of debt. All material things can be lent but this article focuses exclusively on personal loans. Like all debt, personal loans entail the redistribution of financial assets over time, between the lender and the borrower. The borrower initially receives an amount of money from the personal loans provider, which they pay back, usually but not always in regular installments, to the lender. This service is generally provided at a cost, referred to as interest on the debt. Acting as a provider of loans is one of the principal tasks for financial institutions. For other institutions, issuing of debt contracts such as bonds is a typical source of funding. Personal loans and credit are one way to increase the money supply. There are basically two types of personal loans, Unsecured and Secured.

• Unsecured: These may be available from financial institutions under many different guises or marketing packages e.g. credit card debt, personal loans, bank overdrafts, credit facilities or lines of credit and corporate bonds. The interest rates applicable to these different forms may vary depending on the lender. These may or may not be regulated by law. In the United Kingdom, when applied to individuals, these may come under the Consumer Credit Act 1974.