Pros and Cons of Personal Loans

By: Daniel Spivey

Personal loans can be availed at any time when there is deficit cash and for any purpose. Mostly personal loans are taken for buying consumer durables.

Advantages:
&bull Personal loans do not require you to produce any collateral or security, like other loans.
&bull There is no agent or middleman while obtaining this loan.
&bull Banks are always ready to offer personal loans.
&bull All that is required is to satisfy the eligibility criteria.
&bull It may be used for educational or even holiday purposes.
&bull It can be availed during times of emergency when you are short of cash.
&bull It can be availed according to eligibility..
&bull The payment period is up to a maximum of 60 months.
&bull It is better to avail a personal loan than to borrow cash on credit card comparing the interest rate on both.
Disadvantages:
&bull The eligibility criteria are stricter in case of personal loans, since there is no security required and the paper work is minimum.
&bull The bank checks on the capability to repay more than any other loan due to the same reason.
&bull Since the bank has a higher risk while providing personal loans, they follow a list of approved categories of borrowers.
&bull Interest rates for personal loans could range from 12 percent to 30 percent, while the service charges and prepayment penalty are also very high.

Financial crisis make people so engrossed in worries that it becomes difficult to find a way out. Personal loans help to fund the needs. Bearing a medical expense, funding children' education, renovating your home, going on a holiday, buying a car and the reasons may be countless. Personal loan may look after all requirements.

Securing Low Cost Personal Loan is an art. Availing low cost unsecured loans are the quest of almost everybody, as the need for cash is getting higher almost by the minute. And these low cost personal loans may come in different forms. Here are some good tips for getting low cost personal loans. Different lenders give different premiums to match their competitors. The easiest thing to check of course is the interest rate. The main point here is to shop around and look for the lender that will benefit and cater to the needs the most. Compare their offers in all aspects, and not just the interest rate. Other factors like term, payment options, and penalty bonuses are important as well.

Understanding the interest terminology used by the lenders is also important. The interest rate may be APR, Fixed or Variable. The interest for every low cost secured loan offered by financial institutions is computed differently. It is then important that you know how the companies come up with the interest value they are charging you.
A fixed interest rate means that for the particular amount you borrowed, it is required to pay a definite amount of interest throughout the term. Variable rates are the rates differ every month and it depends upon the market's condition.

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