Personal loans are general purpose loans. You usually can use the funds at your discretion, but some lenders will restrict what you do with the money. They're often more difficult to get than credit cards and sometimes come with their own specific rules.
Because personal loans can be used for just about anything, there's no single reason why consumers might seek them. Typically, such loans are an option for purchases or other expenses that are too much to put on a credit card. Some common reasons include:
The loan is unsecured, which means you're not required to place an asset as collateral when you borrow. The lender can't automatically take a piece of your property as payment if you default. This is one of the reasons personal loans are more difficult to get.
You'll have a set period of time to repay your personal loan—usually 12, 24, 36, 48, or 60 months. Longer repayment periods lower your monthly loan payments, but you'll also pay more in interest than if you had a shorter repayment period. Your interest rate also can be tied to your repayment period as well. Shorter repayment periods typically result in lower interest rates.