Is taking a personal loan the right decision?

 We have always thought to take a loan for anything. But there are different types of loans available in the market. Which one is relevant to your requirements? Let us discuss one type of loan which is a Personal Loan.  But is that the right decision?

Every coin has two sides one is Heads and the second side is tails. So same goes for the Personal loan as well. It has some advantages but there are disadvantages as well. So let us discuss the advantages and the disadvantages of a Personal Loan.

Advantages - 

1. Can be taken for anything - Unlike home loans and education loans which are available for specific purposes, it is available for anything based on credit score. One can get a personal loan to do anything.

2. No Collateral - Personal Loan never requires collateral. This is one of the biggest advantages of taking a personal loan. But one has to keep in mind that unsecured loans have higher interest rates as you are not putting any security.

3. Quick Cash - Personal Loan is a way to get quick cash as these loans are approved as early as a day. It can be used while emergency expense comes up.

4. Flexible Borrowing Limits -   The limit of the loan amount to be credited is depending on the lender to lender. But one can select the amount as per convenience. The loan limit is up to 35 Lakhs rupees based on the credit score and income of the borrower. 

Disadvantages - 

1. High-Interest Rates -  Personal Loans have high-interest rates as compared to other loans as it has no collateral therefore it has a little higher rate than others.

2. Can Damage Credit -  Yes, if a borrower is unable to repay the loan on time then it damages more than other loans as it is unsecured and it can affect the borrower's balance negatively as well. 

3. High Fees and Penalties -  When the borrower applies for a personal loan, the lender charge hefty fees from the loan amount as they are not asking for collateral. Some institutions also charge high penalties to the borrower if they pay late than the due date.

4. Need Collateral - WAIT WHAT?? I said no need for collateral earlier but if you have a very bad credit score and still you need a loan then you have to provide collateral to sanction the loan.

 So here are the Advantages and Disadvantages of taking a personal loan. Comment your thoughts that what you think about taking a personal loan. If you want to know about any topic please do comment we will cover it as soon as possible.

If you are reading this blog first time then let me introduce myself, My name is Akash Founder of Finance Talks with Sky. I share information about personal finance, the stock market, and a lot more. To know more about finance and stock markets do follow Finance Talks with Sky.

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