What is a personal loan commonly used for?

A personal loan is commonly used for significant expenses, and purchasing expensive items like a car aligns perfectly with this purpose. Personal loans provide individuals with a lump sum that can be repaid in installments, making them a practical choice for financing such purchases. This type of loan is typically unsecured, meaning it does not require collateral, which is beneficial for consumers who may not want to risk valuable assets.

In contrast, funding ongoing business expenses is more characteristic of business loans or lines of credit, which are designed specifically for commercial needs rather than individual purchases. Using personal loans for everyday living expenses may also be a common practice, but it is generally advised to avoid this due to the potential for accumulating debt and interest charges. Investing in stocks and shares would typically entail a higher risk and might not be considered an appropriate use for a personal loan, especially since personal loans need to be repaid regardless of investment performance.