What are the Pros and Cons of LoansA personal loan is a pool of cash that benefits the borrowers to fulfil their aspirations and emergency expenses. Though personal loan is a liability, paying off the debt has become easier than before. Calculation of monthly instalments in advance helps in easy repayment. Automated EMIs deducted every month keeps a track of payments made and saves from getting listed in defaulters.
There are several reasons why a personal loan is a good choice:
Multi-purpose loan: A personal loan is not restricted to a specific purpose. Once borrowed, it can be usedfor fulfilling different financial needs and emergency bills. Whether academic fees, home renovation or travel expenses, everything can be covered in a personal loan.
Collateral-free: Borrowers who don’t have any asset or security to submit against the loan can also borrow personal loans easily. This collateral free feature makes it easy for lenders to sanction personal loans instantly.
Online application: Quick registration, submission of paper less documentation and real time verification makes online loan application a preferred choice. On sanction, the loan amount is credit to the borrower’s bank account. This is a secured procedure for loan approval that is widely accepted in current times.
Loan EMI Calculator: The EMI loan calculator is a simple tool that enables users to conveniently set EMIs based on the loan amount, tenure and interest rate. Hence, use the EMI calculator flexibly to derive EMI amounts that you can pay easily.
Good amount of paybacktime: Personal loans give you flexible tenures to pay off the debt. The loan is further broken into manageable monthly payments. This ease of repayment is not applicable with other types of loan that demand clearance probably in weeks or months.
Like every facet has both good and bad sides, likewise personal loan is one financial product that has its disadvantages also. Know the cons of personal loan before applying:
Higher Rate of Interest: Borrowers with a poor credit score are charged higher as credit card loans. Unsecured personal loans can cost more instalments than home equity loans.
Personal Loan Fee: Many personal loans are attached with a processing cost that is charged above the interest rate. This fee generally ranges between 1% to 6% of the amount borrowed. This minimal fee should be cleared in the initial loan acceptance stage so that it doesn’t pile up later with monthly instalments.
Prepayment Penalty Charges: Lenders charge a penalty amount in case the loan is cleared before the tenure. This penalty cost is charged to balance the interest amount that the lenders couldn’t earn due to early payment.
Prone to Scams: Beware of fake financial companies luring for personal loans with a low rate of interest. By trusting these scammers, your identity and personal information are also at stake. At times, these false finance providers charge an advance loan application fee to initiate the process.
Q.1 What are the pros and cons of loans?
A: A loan is a great financial help that also has its pros and cons. Best feature about a loan is that it can help you suffice any financial urgency in your life whereas the disadvantage lies in risking your credit score when the EMIs are not paid on time. Low credit scores attract higher rate of interest.
Q.2 What is the best reason for a personal loan?
A: The best reason for a personal loan is the shortage of finance in times of need and emergency. When you want to accomplish a goal but lacking money, apply for a personal loan for prompt monetary help.
Q.3 Can you get a loan online?
A: Yes, you can very well get a loan online in a secured way through a financial institution offering a variety of loans online through websites and instant loan apps.