Personal Loan
Quick Definition
An unsecured or secured loan for personal use, repaid in fixed monthly installments.
Full Explanation
A personal loan is a lump-sum loan repaid in fixed installments over a set period, typically 1–7 years. Personal loans can be unsecured (no collateral required) or secured (backed by an asset). In Canada, unsecured personal loan rates typically range from 6.99% to 46.96%, depending on credit score and lender. They are commonly used for debt consolidation, home improvements, major purchases, or emergencies. Banks, credit unions, and online lenders all offer personal loans. The main advantage over a credit card is a fixed repayment schedule and often a lower interest rate.
Related Terms
APR (Annual Percentage Rate)
The true yearly cost of borrowing, including fees and interest.
Credit Score
A 3-digit number (300–900) indicating your creditworthiness to lenders.
Debt Consolidation
Combining multiple debts into a single loan, typically at a lower interest rate.
Secured Loan
A loan backed by collateral — an asset the lender can seize if you default.
Ready to put this knowledge to use?
Use our free calculators to model your situation based on what you've just learned.