Just at the drop of a hat, many people want to go for personal loans. Based on your financial standing and your monthly income, lenders give you a personal loan. They neither ask you for any security nor do they bother how you are going to utilize the loan amount. Of course, these loans will be available only for a short period and the amount of loan also will not be big. Quite naturally, in the absence of any security, the lenders will charge a higher rate of interest. Because the procedure involved in the matter of a realistic loans and since it is available somewhat easily, people are generally inclined to take this loan.
Disadvantages associated with personal loans
Because of the very nature of its easy availability, people are prone to avail this loan for buying things to improve their ‘style of living.’ They fail to understand that this loan should be put to better use, i.e. to meet urgent and unforeseen expenditure. There are quite a few disadvantages in taking a personal loan. First and foremost, the rate of interest is certainly higher and the repayment terms too will be short. Thus, after you take this loan, your monthly cash outgo will be somewhat big with the result you will have very little cash available to meet your regular requirements. This will have an adverse effect on your monthly budget and you may not be able to save much ‘for the rainy day.’
You are not advised against taking a personal loan. To be frank and practical, there will be times when you may have no other alternative but to take a personal loan. At the same time, however, you must make it a point t find out whether there are any other ways of getting the required money – may be taking hand loans from friends and/relatives or colleagues. After you have exhausted all the possibilities and if you still have not succeeded in getting the required money, you may go in for a personal loan. But make sure you are using the loan amount only for the purpose for which you needed it.
There are many financial companies who are prepared to offer personal loans. There on online lenders too, who will be willing to offer these personal loans. Online lenders give due consideration to your present financial standing based on your monthly income and the value of assets, if any. They would also need details of your existing loans, should there be any and the monthly payments thereon. They process your loan application quickly and give the amount within a day or two. Sometimes, they even credit the loan amount to your account straightaway. When you get the loan easily and in time, is it not your responsibility to see that the monthly payments are made promptly and on due dates? Under no circumstances, there should be any default. If you have chosen to make the payments through checks, you ensure that there is always sufficient balance in your account.
As already said, there are many private finance companies as well as online lenders offering these personal loans. You should collect complete details relating to the offers by various parties, such as rates of interest, repayment terms, etc. After getting these details, you should go through them with utmost care and choose the one that is easy, convenient and affordable from your point of view. As far as the term of repayment is concerned, you will do well to go for a ‘short term’ repayment. And never should you take a loan for more than what you exactly need.