Take the pledge to vote

For a better tommorow#AajSawaroApnaKal
  • I agree to receive emails from News18

  • I promise to vote in this year's elections no matter what the odds are.
  • Please check above checkbox.

    SUBMIT

Thank you for
taking the pledge

Vote responsibly as each vote counts
and makes a diffrence

Disclaimer:

Issued in public interest by HDFC Life. HDFC Life Insurance Company Limited (Formerly HDFC Standard Life Insurance Company Limited) (“HDFC Life”). CIN: L65110MH2000PLC128245, IRDAI Reg. No. 101 . The name/letters "HDFC" in the name/logo of the company belongs to Housing Development Finance Corporation Limited ("HDFC Limited") and is used by HDFC Life under an agreement entered into with HDFC Limited. ARN EU/04/19/13618
CO-PRESENTED BY
LIVE TV DownloadNews18 App
News18 English
272
nda:
Needmore seats to Win
Needmore seats to Win
upa:
»
3-min read

Pros and Cons of Personal Loans

Generally, a personal loan is subject to higher rates of interest, because of the simple reason that it doesn’t warrant you to put your assets on the line.

Updated:April 30, 2019, 3:39 PM IST
facebookTwittergoogleskypewhatsapp
Pros and Cons of Personal Loans
Generally, a personal loan is subject to higher rates of interest, because of the simple reason that it doesn’t warrant you to put your assets on the line.
Loading...
A personal loan is a quick fix to an array of both personal and professional needs – be it funding a medical emergency, financing your child’s education expenses, consolidating all debt payments into one or making a big ticket purchase such as buying yourself your fist house. Usually, this type of a loan doesn’t require you to pledge any collateral with a bank and is an easy mode of financing, considering you comply with a few pre-set parameters.
These include a good credit score (generally, a score of 750 or beyond is considered good), age, employment status, a steady source of monthly income, etc. Eligibility for a personal loan depends on these, and should you meet the standards, you would qualify for this loan that can offer an instant flush of liquidity.

That being said, everything’s not rosy with a personal loan and there are a few downsides to it as well. The remainder of the article tries to weigh in the pros and cons of a personal loan, such that you can arrive at a smart decision when the time comes:

The Pros
1. Multi-purpose loan

A distinctive advantage of a personal loan is that it is multi-purpose; a financial product that can help you meet a number of obligations, no matter their type of scope. From allowing you to fund your child’s education expenses to purchasing a swanky car that has taken the market by a storm, a personal loan can help you do it all.
It is with good reason that a personal loan is often referred to as the ‘Jack of all trades’.

2. No collateral require
d
Unlike many other loans, a personal loan doesn’t warrant you to pledge any asset (personal or business) as collateral in order for you to be eligible for it. A personal loan, by virtue of its easy eligibility criteria and it entailing simple prerequisites, is convenient financing for a range of needs.

3. Adequate loan amount
There is no fixed cap on the amount that you can take out. This essentially means that you can apply for and hope to avail the desired loan amount to meet your obligations, considering you meet the eligibility criteria and assure the bank of your repayment capability.

4. Quick approval process
Banks have started to fast-track the process of personal loan approval and it follows that you can take out the loan within as less as a day, considering you complete all the documentation and comply with the bank’s eligibility parameters. This advantage of a personal loan stands out in dire times when all you need is quick, hassle-free finances.

The Cons
1. High rates of interest

Generally, a personal loan is subject to higher rates of interest, because of the simple reason that it doesn’t warrant you to put your assets on the line. This can make repayment of the loan problematic, should you not have adequate resources at your disposal.

2. Stringent eligibility parameters
The stringent eligibility criteria also hinge on the fact that a personal loan is usually unsecured in nature. Banks generally look at an appropriate monthly income level before approving your application. Besides, your credit score plays an important factor as well wherein a sub-par score can mar your chances of availing the desired loan amount.

3. Rigidity in repayment
While the provision to choose a flexible repayment period is there for the taking, banks aren’t too accommodating when it comes to you tampering with that schedule. This almost takes pre-payment or part-payment out of the equation – meaning that you would have to stick to repaying the amount over the entire tenure of the loan.

The Verdict
No doubt a personal loan is a convenient mode of financing for you to address a range of obligations. But the only prerequisite here is that you should bear these pros and cons in mind before opting for one, such that financial freedom meets prudence along the way.

To know more, click here.

This content has been created in association with YONO SBI.
(Get detailed and live results of each and every seat in the Lok Sabha elections and state Assembly elections in Andhra Pradesh, Odisha, Arunachal Pradesh and Sikkim to know which candidate/party is leading or trailing and to know who has won and who has lost and by what margin. Our one-of-its-kind Election Analytics Centre lets you don a psephologist’s hat and turn into an election expert. Know interesting facts and trivia about the elections and see our informative graphics. Elections = News18)
Read full article
Loading...
Next Story
Next Story

Also Watch

facebookTwittergoogleskypewhatsapp
 
 

Live TV

Loading...
Countdown To Elections Results
  • 01 d
  • 12 h
  • 38 m
  • 09 s
To Assembly Elections 2018 Results