Introduction

Personal loans are the best way, which can be used for a number of purposes. Credit facilities are the backbone of the economy, as a startup needs funds for expansion and an individual needs funds for various needs like education, purchasing a home, a car, etc. For more information click good at personal loan.

It is to be noted that the business of money lending has emerged significantly, and money lenders are financial intermediaries who offer credit facilities to individuals for fulfilling their dreams and businesses for expansion, etc. It is to be noted that there is also an option of applying for a joint personal loan with a co-applicant. This article provides a general overview of the pros and cons of taking a personal loan.

Benefits of taking a personal loan

Personal loans offer various benefits over other types of loans. Here are some of the advantages of taking a personal loan:

• One lump sum: One of the most important benefits of taking a personal loan is that it offers a lump sum loan in one go. An individual can make a large purchase, consolidate debt, and use the loan in one go.
• No need of collateral: Personal loans don’t require collateral security to get them approved. In contrast to various loans such as home loans and auto loans, personal loans don’t require collateral.
• Lower interest rates: Personal loans also carry a low rate of interest as compared to credit cards and other loans. If an individual has a good credit score, then while applying for a personal loan, an individual can save a low rate of interest.
• Approval: Personal loans have a faster approval process and payment times than secured loans.

Cons of personal loans

• Higher interest rates: Personal loans have higher rates of interest in case the borrower has poor credit. Personal loans incur higher rates of interest as compared to secured loans such as mortgage loans, etc.
• More stringent eligibility criteria: It is correctly stated that personal loans have less documentation, but lending companies might impose strict conditions on the credit score and income to mitigate the risk as there is no collateral.
• High fees and penalties: It is to be noted that in personal loans, lenders charge prepayment penalties and loan processing costs, which affect the cost of borrowing.

Conclusion 

A personal loan is a kind of unsecured loan that is offered to meet the various needs of an individual. One of the most important benefits of taking a personal loan is that it does not require collateral security.