Desire is the root of everything. Without desire, this world would be filled with celibates living in the forest eating fallen leaves from trees and wearing barks to cover them. In a world such as that, technology would be non-existent and this very article wouldn’t exist because the internet would never have been invented in the first place.
However, we will let sci-fi story-writers to pick up from here and make a movie on the alternate reality that would have been had it been the case and focus on the topic at hand.
Suppose you are walking on the pavement and your eyes fall on a beautiful gadget or furniture. Suddenly, you feel a burning sensation in your heart to possess it and you take out your wallet…only to find that you don’t have the sufficient money to satiate your desire.
So what do you do? Well, all you need to do is apply for a personal loan. Minimal documentation, no security, flexibility of purpose and quick disbursal are some of the features of a personal loan that make it attractive.
While you can simply swipe your credit card to make a purchase, restraining yourself for some days and applying for a personal loan is the better option due to its comparatively low-interest rate nature on expensive buys. For one, personal loans can be acquired within the space of 2-3 days.
The best part about getting a personal loan is the eligibility range is incredibly huge. All you need to have is a decent job and a certain age criteria and you are as right as rain to get a loan.
However, not everything is rosy and full of sunshine when it comes to taking personal loans as they also have their pros and cons associated which we will map out here…
We will begin with the negatives first so that the ending taste in the mouth is sweet and not sour.
High interest rates:
As these loans are not secured, the interest rate is generally quite high. With respect to what your credit score, debt-to-income ratio and the source of your income is, the rate of interest could vary from 15 to 25 percent. According to these aforementioned faculties, the bank will decide whether or not to lend you and if they do, what the rate of interest will be. It would be wise of you to check for different banks before signing a deal with on as each one has its own offers.
As with every loan lenders under the Sun in USA, the importance of having a good credit score cannot be stressed enough. A good credit score is a noble indication of your history with previous loans. If you have a high score in this regard, you are almost sure to be deemed as worthy of a loan. Banks always measure the amount of risk involved in giving one a loan and having a good credit score is an indication to the bank that the risk of lending you money isn’t much.
Tenure and repayment:
Since these are generally not big-money loans, the amount of repayment time for them is relatively low with the ceiling being 5 years in general. Another drawback here is that partial repayment isn’t allowed in most personal loan cases and the prepayment of the entire loan attracts a stiff prepayment charge. Hence, keeping this mind, going through the terms and conditions thoroughly would be the most advisable thing to do.
And now for the advantages…
Flexibility of use:
This is the biggest advantage of personal loans. Personal loans are incredibly flexible and can be borrowed for a variety of reason from repairing or renovating your home to trips to foreign lands. Basically, you can acquire a personal loan for almost anything and it is for this reason specifically that people are so keen to borrow money for personal expenses.
No security required:
Another thing that sets personal loans apart from the others is that it is unsecured—as in, there isn’t any need to provide collateral or security to the lender. There are obviously things that the banks check before approving your loan but absence of any security makes it much easier for a borrower who does not have any collateral such as shares or jewelry to provide.
Since there is no need for collateral or security, the process of obtaining a personal is simpler than that of a car loan or a mortgage loan. However, it is not that documents aren’t required at all as important documents revealing the borrower’s income, credit score and debt history are essential and must be provided in order for the bank to consider the loan plea.
Once again, given the little number of documents needed, the amount of time needed to have the money in hand is very little when compared to the other loans. This means that borrowers can get their cash very quick, hence making it one of the easiest loans to obtain.
Considering all the things that have been written above, one can make a decision on whether or not to apply for a loan. Personal loans are covered with a drapery that attracts people like nectar attract bees: it is easy to obtain and with very little fuss, so people are very inclined to pursue them time and again.
However, with roses come thorns and it would be advisable if you have to buy something you want rather going the easy way and obtain it instantaneously with the aid of loan since misuse of it could put you in tricky situation that could become very hard to overcome.