Most personal loans are unsecured financial arrangements between you and a bank. For unsecured personal loans, you won’t have to put up any collateral. Thus, interest rates on personal loans are typically higher than they are on secured loans such as home or auto loans, where you do put up collateral, but there are ways to ensure you’re getting the best rate. On the plus side, you can usually use the proceeds of a personal loan for anything you want, although some banks will demand to pay your creditor directly if you are using the personal loan to pay off other debt.