4 pros and cons you may face if you take a personal loan in your 20s
There are lots of things you want to do in your 20s. Partying, making tour and other plans etc. are the common things you do in this age. Getting a personal loan is also a thing on your to-do list. Personal loan’s approval and disbursal time is good and you don’t have to go through heavy documentation procedure. If you’re thinking to apply for a personal loan in your 20s then we recommend you once consider the following.
Pro: Consolidate your credit card debt
Availing on fresh debt could help remove your credit card debt. The well-known personal loan companies give reasonable interest rates than those found on credit cards. Suppose Rs. 1036425 in your credit card debt that you want to pay off and the interest rate your card issuers are asking is 15%. If you made the decision of paying it off with the help of borrowing a personal loan at 10% APR with a shorter term and higher EMIs, then according to credit card consolidation you’d save Rs. 769580. Most importantly, you’d pay off your creditors and push your credit card balance back to nil. In spite of the fact that you'd even now have $15,000 in debt, you'd relish different advantages of personal loans.
Con: Chances of misuse the loan
Personal loans can be used for multiple purposes such as wedding occasion, pay off medical bills, traveling or for your personal expenses. You shouldn’t use a loan amount for any illegal purpose. There are various ways you could use your loan funds but not all of them are genuine. Take a glimpse at these expenses:
Daily bills: Personal loan can be used to handle financial emergencies. If you’re availing loan to pay your daily bills such as phone, water or electricity then we would like to tell that never ever commit this blunder. It will cost you more than your daily bills. You may feel relief after paying off your bills but about those EMIs with higher interest rate? Kindly make sure for what purpose you’re taking a loan.
- Vacation: We all want to travel and when it comes to our dream destination then we don’t want a miss a chance. For traveling you can take a loan, there’s no restriction but if your repayment capacity or your financial background is strong then you can otherwise after having one trip can’t think about another trip for few years.
- Wedding: When it comes to the wedding then we can say you can take a personal loan for this special occasion. Whether it is marriage or travel, all purposes should be genuine and before purposes, it’s important that you’re ready to pay the monthly payments with higher interest.
Pro: Invest in yourself
There are multiple expenses and there are some purposes for them you can avail this loan.
- Relocating:For example, you’ve cleared an interview for an out-of-state job and you will have to pay for your transportation. Well, you can apply for a personal loan to moving cost and your new salary is sufficient to assist you to return the loan.
- Education: You may decide to apply for a student loan so you can handle the expenses of your undergraduate and post-graduate degrees but you have also an option of a personal loan. You can avail a personal to pay for a class, and certification etc.
- Small Business:If your credit score is brilliant, you can avail a personal loan to start a small business. Before applying, make sure your repayment plan is strong.
Con: High-interest rate
As we know personal loan comes to with a higher interest rate. There are various lenders offer loans at much higher interest rates with the same short repayment structure. Don’t show haste in such situation or may have to pay extra. We aren’t saying availing loan before or at 20 isn’t a good idea but stability matters. If you have good income flow then you are free to apply for a personal loan.