Personal loan is a type of debt: bank or other financial institution lend some money to a borrower. The person who gets a loan is obligated to pay his (or her's) debt after certain amount of time. The main difference between credit card or overdraft and a personal loan is that by taking a loan you can get more money, but it is also less flexible than the two other financial products. The money is paid back in regular installments, typicaly on monthly basis. Of course, nothing's free nowadays. Although you get the money, there is some cost of the debt, which is called "the interest". Basically, it is an incentive for the financial institution to lend money to the borrower. So, when you borrow 1000 pounds you'll pay ig. 1200 pounds back. Of course, it's only an example and an actual cost of the loan depends on the so called APR (annual percentage rate), which is deifferent for different financial institutions. There are two types of loans: unsecured and secured. When you take secured loan, you offer some of your asset, like your home or car, as a collateral for loan. It means that the bank becomes the owner of your property when you are insolvent. Unsecured loan isn't secured against any specific asset, like borrower's home, flat or car, so the bank or any other financial institution believes that you are going to pay your debt without any problems. As it gets no guarantee for your payback, the interest rates for unsecured loans are higher than for secured loans. This is the main reason why secured loans are offerd for larger amounts of money.