Personal Loan: Pros and Cons to Know

What are personal loans, and how do they differ from bank loans? What are the alternatives in the list of financial prospects of the population? 

Such questions are asked by a person, for the first time thinking about whether to borrow or not. Interest can be understood because all loans impose obligations, and not everyone knows what a personal loan is. Therefore, it is quite expected that the borrower has questions when he draws it up — what is it, and in what cases is it profitable to issue it?

Microfinance organizations provide this service. A private person has the opportunity to receive a small amount of money for a short time at interest. The procedure, in this case, is technically easier than with “traditional” loans. The procedure for issuing a loan in all companies is similar, only the size of the interest rate differs.

Pros of Personal Loan Taking

Among the undeniable advantages of “quick money” stand out:

  • minimum bureaucracy: to issue an application, it is not necessary to provide the bank with an income certificate or confirm solvency by printing from the tax inspectorate;
  • absence of guarantors: even receiving a large amount within the range of opportunities does not require a third party pledge;
  • time savings: the main advantage that distinguishes microcredit from ordinary bank loans is the speed of processing and considering applications;
  • quick execution of operations: transfer to the client card is carried out in few minutes;
  • high probability of application approval: the percentage of approved applications in this area is always very high;
  • a wide choice of tariff plans: even though mini-loans have appeared on the financial services market relatively recently, the number of firms ready to offer their help in this area is quite large, and each of them seeks to attract an audience with a flexible, loyal and profitable policy;
  • democracy: everyone can issue microcredit after reaching full-year, even if the client’s credit reputation is not ideal.

What Are the Cons of a Personal Loan?

A personal loan is the most expensive way to borrow, and this is the main reason why it is dangerous. Due to high-interest rates, debt is growing rapidly. Even if a loan is issued in the amount of 0.01%, when payment is delayed one day, fines or increased interest will be imposed.

Saving, borrowing money in just a couple of days, will turn out very little (or not at all). MFIs do not want to lose profits, so they accrue higher interest rates or require additional fees for a personal loan within fewer days. 

If you decide to take a loan on the card, be ready to return the money on time, not a minute later. In case of non-payment of the debt, the creditor has every right to go to court to ensure the recovery of the debt and compensation for losses.

Where to get a personal loan so that the deal takes place safely? Where can I take microcredit as profitably as possible? To find the correct answer to these questions, you need to study the information provided by each company carefully. Read customer feedback, ask friends and acquaintances who also use such services.

As you can see, microcredit is characterized by both pros and cons, with which you are now familiar; it remains only to weigh everything and make the right choice!

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