The first question, which would arise in your mind, when you think to avail personal loan, is that whether it would be beneficial to avail the loan or not.
The answer to this question depends on many situations. If you are in crucial need of money but don’t have any assets or own credit card, a personal loan is certainly the answer. This is because the personal loan would result in a practical decision rather than cash withdrawal, which would be expensive. But if you have assets like property, gold, or shares, it would be valuable if you will consider a personal loan against any of these assets.
In the case of a quick loan, without undergoing the tiresome documentation, without giving any reason for the loan, a personal loan is advisable because you will get it easily in as short as 24 hours. All that you need to do is fill the application form with the lender and the cheque would be granted to your doorstep as soon as possible. However, before you avail a personal loan, you must go through the pros and cons of a personal loan, in order to make a wise decision.
Personal loans provide:
- The flexibility of use: They can be used for various purposes, ranging from medical expenses, travel expenses, purchasing the latest jewels, gadgets, house improvements, or other liabilities.
- Quick Availability: You can get the loan as soon as possible.
- Minimal documentation required: Normally the processing time of the personal loan is less as it doesn’t require much documentation.
- No collateral or security needed: Security is not required to apply for this loan, and the loan tenure is less as compared to a home loan or car loan. Personal loans don’t need any security, so your assets are safe. It makes this kind of loan attractive.
Despite their attractiveness, personal loans do have their fair share of disadvantages that are:
- High-interest rates: As these loans do not require any security, they are regarded as high risk. So in order to overcome this risk, high-interest rates are charged
- No part payments: Payment before the completion of tenure is not allowed by most of the lenders. This restriction can be expensive since your initial installments go towards interest payments.
- The requirement of good credit rating: This loan requires strict eligibility criteria based on creditworthiness
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Special Note: An individual must examine the whole EMI amount payable to the lender with the Personal loan EMI calculator.