It's a loan that a bank or other financial institution grants to individuals, allowing them to obtain cash to meet any financial need, such as paying off a debt, financing their children's education, paying for utilities, taking a vacation, and more. Taking out a loan is a very common solution for unexpected expenses, financial emergencies, or other one-time expenses that exceed your current payment capacity. Personal loans are an easy-to-obtain alternative, with no formalities or requirements, for paying off debts, purchasing assets, or even traveling. Here's how they work and what their features are. How does a personal loan work? The bank gives you a lump sum of money, on the condition that you repay the same amount over the medium term, plus the agreed-upon interest. You can settle your debt in a single payment or through periodic payments (installments). To assess your ability to repay the requested amount, some banks use a credit scoring system. Based on your assessment, they determine whether they'll grant you a personal loan and at what interest rate . Personal loan interest rates can vary significantly depending on your credit history. Therefore, it's recommended to apply for a loan only when you're confident you can pay. Characteristics of a personal loan Most personal loans are used to purchase consumer goods and services, such as a car or laptop, home renovations, appliances, vacations, or studies abroad. They can also be used to pay for emergency expenses, such as debt or medical expenses, if necessary. Personal loans, unlike other types of loans such as mortgages or car loans, do not require additional collateral. That is, the borrower is responsible for the loan with his or her present and future assets. Generally, personal loans do not require a guarantor. To get a loan, you don't necessarily need to have a bank account. Personal loan amounts are usually not that high, as the risk of default is higher. However, these amounts are considerable when compared to the credit we can access with a credit card. They have a cost of 0 to grant. Processing personal loans is much faster than other loans, and you can even do it 100% online. What types of personal loans does BBVA offer? At Golden Credit, we have several options to choose from, depending on your needs: Personal Loans: Fixed rate with terms from 6 to 60 months and a maximum loan amount of $30,000,000. Learn more. Sustainable Loans : To acquire sustainable goods that contribute to environmental protection. Learn more about this global trend.