What is a personal loan, and when should I take one?

A personal loan is an unsecured loan, meaning you don’t need to pledge any asset. It can be used for almost any purpose, like medical expenses, weddings, travel or emergencies.

Because there is no collateral, interest rates are higher than for home or gold loans. Personal loans make sense for genuine needs when you have a clear repayment plan, and ideally when no cheaper option is available.

Avoid them for lifestyle spending or to repay other debts without changing habits. Compare interest rates, processing fees and prepayment charges. Be extremely careful with instant loan apps; use only those linked to RBI-regulated lenders.