Loans provided by a bank or other financial lenders without any security are called personal loans. Now let’s see some of the Pros and Cons of personal loans.
Pros
- No collateral and security needed.
- There is no fixed limitation on personal loans. You can ask for any amount that will fulfil your requirement and the actual amount depends on how much the lender wished to give.
- It can be used for any legitimate purpose from buying a new TV or mobile phone, for a vacation, for education or for any emergencies.
- It is easier to budget because the loan repayments are usually a fixed amount each month.
- You can choose the tenure of repayment as per your wish.
- It has very simple documentation process.
- You can reduce your monthly repayment costs by combining several debts into one personal loan.
Cons
- Compared to some other loans personal loans have higher rates of interest and higher processing fee.
- With no cap on the amount to borrow you can be tempted to take out a bigger loan than needed.
- There are strict guidelines that lenders follow personal loan to eligibility criteria.
- Repayment method is rigidity once the repayment tenure is chosen.
