Advantage and Disadvantages of Personal Loans

When we need money for some urgent purpose, other than asking friends and relatives for a handout, the easiest option is to go for a personal loan. However, you need to know the pros and cons before you apply for personal loan online.

Disadvantages

• Credit score

A good credit score is required to get personal loan at low interest. If the credit score is poor, then the interest rate is high.

• Relocation of debts

Taking a personal loan to refund your credit card is like you are not clearing the debt but just relocating it.

• Additional fees

In addition to the interest, loan approval fees might be charged when you get a loan. Also, you might be fined for late payments.

• Loss of money as interest

You may not be able to pay a part of your capital amount in mid of the term, so the interest remains high till the end of the loan period.

• Collateral seizing

If you take a secured loan and are unable to pay on time, then the collateral you have backed up with be might be seized by the lenders.

Advantage          

• Simple processes

Instant personal loans online are usually quickly approved based on credit history and credit score. The procedure is very simple and easy.

• Immediate money

Once you get approval for personal loan, then the money will be credited immediately. So, you can depend on personal loan on emergency needs.

• Lower interest than credit cards

Personal loan interest rates are generally less than that of credit card loans. The monthly payment and the interest rate could also be lower than that you pay for the credit cards.

• Easy monthly installments

While repaying the personal loan, you pay a fixed amount every month for a fixed period of time. It ensures eventual reduction of your debt. Also, you can plan your future as you know when your loan gets cleared.

What are the types of personal loans?

Secured personal loan

If you have a low credit score, then secured loan is the best option. Here you can take loan with collateral for low interest.

Unsecured personal loans

When you take an unsecured personal loan, you don’t need any collateral. You get loan approval based on your credit score itself.

As a whole, taking a personal loan is the easiest means to handle an emergency financial needs. There is no risk in getting a personal loan, as long you make your repayments on time. You can apply for instant personal loan online at Nitstone Finserv. File the online form to apply for personal loan online.