 TITLE: What Is an Unsecured Personal Loan? CONTENT: How Unsecured Personal Loans Work\n---------------------------------\nAn unsecured personal loan works similar to other types of loans. You apply for a personal loan from a lender, such as a bank, credit union or online lender. The lender will review your application and likely check one of your credit reports and scores.\nBased on your creditworthiness, the lender will either approve or deny your application. If it approves your application, the rates and terms you're offered can depend on your creditworthiness and the amount of money you want to borrow.\nIf you're taking out a loan for a specific purpose, such as consolidating credit card debt, the lender might be able to send the money directly to the card issuers. But generally, the loan is sent to your account. You'll have to start repaying the loan once it's disbursed.\nUnsecured loans sometimes have restrictions in the loan agreement that forbid you from using the money for certain activities, such as starting a business, investing or paying educational expenses. But generally, you can use the money for anything else.\nSome choices may be more financially sound than others, though. For example, consolidating credit card debt can help you save money and lower your monthly bills. But taking out a large loan to pay for a vacation might leave you with the financial blues once you're back home and making payments. END