The Pros and Cons of Personal Loans

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The Pros and Cons of Personal Loans
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• Should you go for a personal loan? The answer
  depends on your circumstances. If you have a
  pressing need for cash, and don't have any
  assets, but own a credit card, a personal loan is
  certainly advisable. This is because cash
  withdrawal using your card is far more expensive
  than a personal loan. But if you have assets like
  property, gold or shares, it is advisable to take
  a loan against these assets since these loans
  have lower interest rates.

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• Need money in a hurry without having to go
  through tedious documentation processing? Want
  cash to fulfill your need without having to
  explain the reason for obtaining the loan? Then
  personal loans are your best ally. You can get
  them easily in a period as short as 24 hours. All
  that is needed is to fill out an application form
  with the lender and the cheque would be delivered
  to your doorstep within a few days. In some case,
  the amount may also be credited to your bank
  account (if you hold savings account with the
  lender). However before you rush out to get a
  personal loan, it is important for you to
  understand the pros and cons of personal loan, in
  order to make an informed decision.

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• Flexibility of use Personal loans are
  multipurpose. They can be used for various
  different types of purposes, ranging from travel
  expenses, medical expenses , purchasing the
  latest jewellery to electronic gizmos or even
  house/car improvements.

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• Quick availability Getting the personal loans is
  very fast. In some cases, you can get the loan
  even within 24 hours. So if you are looking for
  emergency funds, personal loans are your best
  bet.
• Minimal documentation required Normally,
  personal loans don't need much documentation, as
  compared to a home loan or car loan. Hence the
  processing time is quicker.
• No collateral or security needed No need for
  security is required to obtain this loan and the
  loan tenure is much shorter compared to home loan
  or car loan. This has less risk for the borrower
  comparatively, since if you are unable to repay
  the loan, your security is forfeited in case of
  other loans. As personal loans don't need any
  security, your assets are safe. This makes this
  kind of loan attractive to those who don't own
  any assets like car, home, shares etc.

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• Cons Despite their apparent attractiveness,
  personal loan India do have their fair share of
  disadvantages. Prominent amongst them are
• High interest rates As these loans don't need
  any security, they are regarded as high risk by
  the lenders. In order to offset their risks,
  these loans carry very high interest charges.
• No part payments Most lenders don't allow part
  payment of loans. This means you end up paying
  the loan for the entire tenure of the loan. It
  can work out quite expensive, since your initial
  installments go towards interest payments.

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Source http//in.reuters.com/article/the-pros-and
-cons-of-personal-loans-idINDEE86M05620120723
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