A personal loan is a financial product that can be taken for any number of reasons; it is simply for ‘personal’ use. It can be used for any legal function and an effective way to fund important purchases. The common reason to take out personal loan includes:
• Take a vacation
• Buy a car/electronic gadget
• Wedding expenses
• Paying medical bills
• Debt consolidation
• Finance renovations
This loan can be either secured or unsecured. A secured personal loan offer a form of security/collateral which can be seized if loan isn’t repaid and unsecured loan when no collateral is provided, the borrower is charged with high rate of interest. A good place to get a quick guide to personal loan is ShubhBank’s website, where you can have a look on interest rates, fees and features that best suits your unique circumstances. They come with both advantages and disadvantages like all other financial products. The pros and cons of personal loan are discussed below in detail.
PROS OF PERSONAL LOAN:
A personal loan gives you the opportunity of getting a big chunk of money in short period of time. The biggest advantage of the loan is its average interest rate that is lower than credit card interest rate for which people use it to escape a credit card debt trap. It also offers a benefit of structured repayment plan, which will let you pay off the debt in regular installments. It is the handy way to hit the large bills when a family member has just been rushed to hospital or you’ve to conduct emergency repairs on your house.
CONS OF PERSONAL LOAN:
The formal loan application can be annoying and it always cost you in the form of higher interest rates. Everyone is not financially capable to successfully repay the loan letting you in debt trap as it forces you to spend too much and save too little.
Personal loans are on the rise because of easy availability and minimal paperwork. They are best suited for the borrower who plans to repay the loan in short time minimizing the interest you owe. Taking out a loan should never be done lightly; you should seek advice from financial expert before you take out the product. Each person’s financial and life circumstances are unique, so it’s better not to take out a loan to improve your lifestyle. The lower quantum is better, so you can get out of debt as quickly as possible. It is a great resource when you are in need, so lenders have an intense process of verification. To ensure who you say you are and that you can pay the loan back, lender will ask for following documentation before approval:
• Personal identification
• Proof of income
• Bank statements
• Assets and liabilities
“Applying for a Personal Loan” is very simple process as the eligibility criteria for it is not too strict; lender is only concerned about the repayment capacity. In addition to gleaning information about this financial product, you can also use our online tool to plan and calculate your EMI. These loans are lucrative tool for personal needs but can also land you in serious debt. So take your time to compare the best offers and lock in a deal that turns the tide in your favor.