Final answer:
A personal loan is an installment loan, which is repaid in regular payments over time. This could include various situations, from consolidating debts to financing purchases, similar to how businesses and individuals arrange loans for cars or homes.
Step-by-step explanation:
A personal loan is a type of financial arrangement in which a borrower receives a specific amount of money from a lender and is obligated to pay back that amount, plus interest, over a predetermined repayment period. This question explores the nature of personal loans by presenting multiple-choice options. The correct answer is that a personal loan is c. Installment loan. An installment loan is a broad category of loan where the borrower pays back the principal and interest in regular payments or installments, usually on a monthly basis. This can encompass various types of loans, including auto loans and home loans, but also refers to general personal loans used for personal expenses, such as consolidating debt or financing a large purchase.
Understanding the nature of loans & interest, as well as specific types of loans such as home loans and auto loans, is crucial for making informed financial decisions. Calculating what one can afford when obtaining such loans is essential to avoid the severe consequences of default, such as property repossession or legal actions from lenders.