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Personal loan is a type of loan granted by the lender to the borrower for personal expenditures. The loan amount can be used for any personal expenditure such as wedding expenditures, a trip, home renovation and other expenditures. Personal loans are usually approved quicker and are available to pretty much everyone.
Pros and cons of personal loans:
Everything in this world comes with its own advantages and disadvantages and so does personal loans. Though personal loans might seem like a boon, they can be quite a bane too sometimes.
Pros or advantages of personal loan:
Listed below are the important pros of personal loans.
Convenience-There is no restriction as to what the loan amount can be used for. The personal loan amount can be used for any personal expenditure.
Quick approval-Personal loans are approved much quicker than regular loans.
Simple documentation-Personal loans follow a simple application process and require very less documentation.
Additional benefits- Some personal loans come with additional benefits such as personal accident insurance.
Unsecured loans-Most of the personal loans are unsecured loans and hence they don’t need any collateral.
Higher loan amount offered by some banks- Some of the banks offer personal loan up to Rs.30 lakh which is a very huge amount.
No asset at risk(unsecured personal loan)- If the personal loan is unsecured then there is no risk of pledging and losing an asset.
Cons or disadvantages of personal loans-
Listed below are the important cons of personal loans.
Higher rate of interest-The rate of interest on personal loans is much higher than the rate of interest on regular loans.
Good credit history-Some banks require the applicant to have a good credit history to avail a personal loan. If you are opting for a unsecured personal loan then a good or average credit history is a must.
Hamper credit score-Too many personal loans might hamper your credit score.
Higher monthly payment- Higher loan amount and short term loans make for higher monthly payments. This can prove to be troublesome after the first couple of repayments.
Limited amount of money-In very rare cases do banks offer personal loans for a high amount. Usually the loan amount provided for personal loans is very less.
Thank you for Checking through our slide. For more information about the Personal Loans in UAE then just browse through BankBazaar.ae.