Benefits & Drawbacks of Personal Loans - PowerPoint PPT Presentation

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Benefits & Drawbacks of Personal Loans


Majority of the people who experience financial difficulties have the bad habit of filing for loans when doing so can do them more harm than good. – PowerPoint PPT presentation

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Title: Benefits & Drawbacks of Personal Loans

Benefits Drawbacks of Personal Loan
Prologue of Personal Loan
  • There are myriad of desires which go unfulfilled
    because of lack of funds. One must have
    considered taking a loan to fulfill your desires
    and aspirations.
  • The paperwork and the time the bank will take to
    process your loan is sure to daunt the
  • The biggest problem is to find something of
    sufficient value to pledge as collateral.
    However, the solution to all these problems is

Prologue of Personal Loan
  • Majority of the people who experience financial
    difficulties have the bad habit of filing for
    loans when doing so can do them more harm than
  • To keep oneself from experiencing bad financial
    consequences in the future, one have to see to it
    that an individual carry out a good amount of
    research that will help him/her assess two
  • If an individual really need to file for personal
  • If one can repay it without damaging his/her
    credit rate.

Benefits of Personal Loan
  1. Online Applications  Most banks allow an account
    holder to apply for personal loans online. This
    saves you from going to the bank and waiting to
    find an employee who is free to attend to you.
  2. Quick Sanction of the Loan A personal loan is
    ideal if you require money in a hurry. An account
    holder gets a loan almost as soon as it is
    applied for. The other plus point is banks
    disburse loans on the very day it is sanctioned.
  3. Documentation Another benefit of personal loan
    is that there is hardly any requirement of
    paperwork in a personal loan because it is an
    unsecured loan.
  4. Proofs Required If you can provide your address
    proof, identification proof, and income proof,
    the loan is yours to enjoy.
  5. No Hidden Charges Most banks encourage their
    customers to take personal loans. This is why
    there is very little paper work involved.
     Another way that the banks make personal loans
    attractive is by ensuring that all the charges
    are up front. In this manner, the applicant is
    saved the burden of paying hidden charges. Hidden
    charges ultimately hike up the rate of interest
    in a loan. This is another reason why personal
    loans are popular.

Benefits of Personal Loan
  1. No Collateral  Personal loans are unsecured
    loans, therefore, they do not require any
  2. Free Usage Every other kind of loan binds the
    borrower to use the money for the purpose for
    which the loan was sanctioned. If it is a
    business loan you have applied for, then you have
    to use it for business only and nothing else. If
    you have taken an automobile loan, then you must
    buy an automobile. But personal loans do not bind
    you in any manner. Only a personal loan allows
    you to spend the money as and where you want to
    spend it
  3. Repayment An account holder has a choice in the
    repayment plan of a personal loan. Repayment
    could be made lump sum, in a few installments or
    it could be spread over many months in equated
    monthly installments. The choice lies with the
  4. No Penalty There is a penalty for part payment
    or early repayment of personal loans.
  5. Easy Transfer As an account holder, it is easy
    to instruct the bank to transfer the installments
    for repayment. You are spared the trouble of
    manually transferring the money for repayment
    when it is due. Timely repayments will help in
    keeping your credit score healthy.

Drawbacks of Personal Loan
  1. High interest rates As these loans dont 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.
  2. No part payments Most lenders dont 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.

Drawbacks of Personal Loan
  1. Need for good credit rating As these loans are
    quite risky, most lenders insist on their
    borrowers having a good credit rating. So if your
    credit rating is poor, due to failure to pay any
    loan, your application will be rejected. Hence
    this loan availability is subject to strict
    eligibility norms based on credit worthiness.
  2. Variable loan and interest as per your credit
    rating Even those lenders, who offer loans to
    the borrowers with poor rating, end up offering
    lower principal amount and higher interest as
    compared to those given to borrowers with good
    rating. They also impose stricter repayment terms
    on these borrowers.

Thank You !!!