Fast, unsecured, and the easiest place to overpay.

Nothing secures it. If the loan goes bad the lender has no asset to fall back on, so the risk is priced into the rate. That is also why your credit score moves the number far more here than on any secured product.

A flat rate charges interest on the full original principal for the entire tenure, even though you have been repaying it all along. A reducing-balance rate charges only on what you still owe. A 10% flat rate is roughly equivalent to 17–18% reducing balance. Always insist on the reducing-balance figure — and on the APR, which includes fees.

The application triggers a hard enquiry, which dips the score slightly. Beyond that, an unsecured loan repaid on time builds history and helps. Several applications in a short window is what genuinely damages the file — which is the reason to compare before applying.

Often the single best use of one. Cards typically run at 36–42% a year; a personal loan at 12–16% converts that into a defined, cheaper, closing-date schedule. The trap is running the cards back up afterwards and ending up servicing both.

Processing fee of roughly 1–3% of the sanctioned amount, prepayment or foreclosure charges (common on unsecured loans, and not barred as they are on floating home loans), late payment penalties, and any bundled insurance. Compare the all-in cost, not the headline rate.