You can get personal loan depending on your situation. If you really in need of cash and you don’t have any asset to liquidate then it is a good thing to go for personal loan application.
Without too much documentation processing is one good thing about personal loan and it is very easy to process, all you have to do is to submit an application form then within 24 hours processing you can already receive your money.
In some cases the borrowed amount is being credited to the borrower’s bank account. But, before you get out and apply for a personal loan, it is very important for you to know first the pros and the cons of personal loans.
The Pros of Personal Loans
Personal loans have so many benefits and those are the following:
- Flexible usage. This type of loan is multipurpose. They work for many purposes like medical expenses, buying the latest set and style of jewelries, home improvement, travel expenses and car improvements.
- Fast availability. Once you got approved, you can eventually get the loan on or before the 24 hour deadline. So, for emergency funds, the best bet you can have is to apply for personal loan.
- Less documentation processing. Personal loans only require a minimal documentation compared to car loan and home loan.
- No security or collateral needed. The lender is not asking for any collateral to acquire this loan and the repayment period is shorter than the car loan and home loan. This is less risky in the part of the borrower since no collateral needed, so you can assure that all your precious assets are indeed very safe. This kind of loan are get more attraction for those people who doesn’t have any assets like home, car, shares and many more.
The Cons of Personal Loans
- Interest rates are very high. Since this type of loan don’t require any security or collateral, lenders consider this loan too risky on their part that is why in order for them to generate profit and offset all the risks then they have to make the interest rate high.
- Do not carry part payments. Several money lenders don’t allow their borrowers to pay partially for their loans. This means that you will have to pay for your loan until the tenure of the loan ended. Yes, it is quite costly since the initial installment that you pay goes directly to the interest payment.
- It needs a good credit history report and rating. Since this loan is very risky, lenders insist that the borrower should have a very good credit history report and rating. If you have any existing loan because you failed to pay them then a big chance for lenders to reject your loan application.
- Lower amount of loan but with high interest depending on your credit history and rating. There are also some lenders that offer personal loans to those who have poor credit rating but they are putting higher interest rate for it compared for those with good credit rating. Lenders also imposing strict repayment terms for borrowers who have poor rating.
Borrowers should always keep in their minds the pros and the cons of personal loans. They have to know that failure to make repayments for their loans can give them poor credit rating and might also give them some legal troubles.