Personal loan is a short term loan – on an average 3 years – extended to an individual irrespective of what need it is being used for. In banking parlance, it’s an unsecured loan where a consumer doesn’t have to provide any collateral to avail this loan. This loan is purely given on the basis of consumer’s credit profile and the financials he/she provides. The interest rate of personal loans are generally higher when compared to secured loans such as home loans and car loans.