Benefits & Drawbacks of Personal Loans

1
Benefits Drawbacks of Personal Loan
2
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
  individual.
• The biggest problem is to find something of
  sufficient value to pledge as collateral.
  However, the solution to all these problems is
  simple.

3
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
  good.
• 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
  things
• If an individual really need to file for personal
  loan
• If one can repay it without damaging his/her
  credit rate.

4
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.

5
Benefits of Personal Loan

1. No Collateral  Personal loans are unsecured
   loans, therefore, they do not require any
   collateral.
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
   applicant.
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.

6
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.

7
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.

8
Thank You !!!