A personal loan is an amount of money that can be borrowed from a bank or licensed moneylender to pay for anything that the borrower needs the money for. It is considered as an unsecured loan because it does not need to be backed by collateral like a house or a car; if the borrower fails to pay back the loan there are no repercussions. However, if the borrower is not able to pack back the personal loan, it will affect his/her credit score that might hinder their chances of getting another loan.