Financial Counseling Certification Program (FiCEP) Practice Exam 2025 - Free FiCEP Practice Questions and Study Guide

Personal loans are indeed a common type of consumer loan. They are typically unsecured loans provided by banks, credit unions, and online lenders that individuals can use for various purposes, such as consolidating debt, covering unexpected expenses, or financing large purchases. One of the key features of personal loans is their fixed repayment terms, which allows borrowers to plan their monthly payments over a set period.

Unlike secured loans, which require collateral and can put an asset at risk, personal loans usually rely on the borrower’s creditworthiness to determine eligibility and interest rates, making them accessible to a wide range of consumers. The flexibility of using personal loans for multiple needs without the requirement of specific collateral makes them a popular choice among consumers for financing personal projects or needs.

While mortgages, lines of credit, and payday loans are also types of consumer loans, they serve different purposes and have different structures and risks associated with them. Mortgages are specifically tied to home purchases, lines of credit allow for borrowing up to a certain limit, and payday loans are often high-interest loans meant for short-term needs. Thus, personal loans stand out as a versatile and commonly utilized option for consumers.