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What Is The Definition of a Personal Loan?

Loan granted for personal, family, or household use, as distinguished from a loan financing a business. Such loans, often made for amounts under $5,000, are usually unsecured, though in some situations the lender may require a co-signer or guarantor. If unsecured, the loan is made on the basis of the borrower's integrity and Ability to Pay. Generally, these loans are used for debt consolidation, or to pay for vacations, education expenses, or medical bills, and are amortized over a fixed term with regular payments of principal and interest. See also Installment Credit; Savings Account Loan.


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