What is a personal loan?
A personal loan is a loan that does not require any collateral security and can be used in flexible ways eg for education, marriages, for holidays, etc.
A personal loan is an amount that provides funds borrowers can use for any purpose, unlike an auto loan or a mortgage, which are reserved solely for the purchase of certain property that is then used as collateral for the loan.
Personal loans are available from banks, credit unions, and online lenders.
Want to know about the Advantages and Disadvantages of Personal Loan? Here is the best information for you.
Advantages and Disadvantages of Personal Loan
- The flexibility of use: Can be used in multipurpose. They can be used for various different types of purposes, ranging from travel expenses, medical expenses, purchasing the latest jewelry to electronic gizmos or even house/car improvements.
- Quick availability: Getting personal loans is very quick and easy. In some cases, you can get the loan even within 24 hours. So if you are looking for emergency funds, personal loans are your best bet.
- Minimal documentation required: Normally, personal loans don’t need much documentation or paperwork, as compared to a home loan or car loan. Hence the processing time is quicker and easier.
- No collateral or security needed: No need for security is required to obtain this loan and the loan time period is much shorter compared to a home loan or car loan. This has less risk for the borrower comparatively since if you are unable to repay the loan, your security is forfeited in case of other loans. As personal loan does not need any security, your assets are safe. This makes this kind of loan attractive to those who don’t own any assets like cars, homes, shares, etc.
Disadvantages of personal loan
- High-personal loan interest rates: As it does not require any security, they are regarded as high risk by the lenders. In order to offset their risks, these loans carry very high-interest charges.
- Need for good credit rating: As these loans are quite risky, most lenders insist on their borrowers having a good credit rating. So if your credit rating is poor, due to failure to pay any loan, your application will be rejected. Hence this loan availability is subject to strict personal loan eligibility norms based on creditworthiness.
- Variable loan and interest as per your credit rating: Even those lenders, who offer loans to the borrowers with a poor rating, end up offering lower principal amounts and higher interest as compared to those given to borrowers with good ratings. They also impose stricter repayment terms on these borrowers.
- No part payments: Most lenders don’t allow part payment of loans. This means you end up paying the loan for the entire tenure of the loan. It can work out quite expensive since your initial instalments go towards interest payments.
You can apply for Personal Loan on Dialabank. Just fill the online form for a personal loan on Dialabank and you will get a call back within 5 minutes. Your loan will be approved after 10 minutes and disbursed within 2 days certainly. Furthermore, if you can also call on 60011600 for more information.
Special Note: An individual must examine the whole EMI amount payable to the lender with the Personal loan EMI calculator.