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Pros and Cons of Personal Loans

When it comes to overcoming a financial crisis, personal loans always emerge as the first choice among borrowers. Whether it's a month-end cash crunch, day-to-day expense or a significant emergency, a personal loan can help you take care of all these expenses and much more. Over the past few years, the number of personal loan lenders in India has also increased significantly to meet the burgeoning demand. There are many types of personal loan lenders as well. You can approach traditional lenders like banks, opt for NBFCs or try out FinTech lenders known for their technological capabilities. I

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Pros and Cons of Personal Loans

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  1. Pros and Cons of Personal Loans

  2. When it comes to overcoming a financial crisis, personal loans always emerge as the first choice among borrowers. Whether it's a month-end cash crunch, day-to-day expense or a significant emergency, a personal loan can help you take care of all these expenses and much more. Over the past few years, the number of personal loan lenders in India has also increased significantly to meet the burgeoning demand. There are many types of personal loan lenders as well. You can approach traditional lenders like banks, opt for NBFCs or try out FinTech lenders known for their technological capabilities. In addition, there are different types of personal loans, such as a low-salary personal loan and a personal loan for wedding. This blog discusses two advantages and disadvantages of a personal loan. Read on:

  3. Advantages: 1.Unsecured Source of Funds The primary advantage of opting for a personal loan to get emergency funds is that you don't have to worry about collateral. Unlike home loans or automobile loans, you don't have to put up security against your personal loan. As long as you meet the set eligibility criteria, you can apply for one. Then, once your application is approved and you receive the loan amount, you can go ahead and use it to meet your financial requirements.

  4. 2.Flexibility in Usage Another great advantage of taking out a personal loan is that you can use it to meet various needs. If your monthly income isn't that you're trying to overcome a cash crunch, then a low salary personal loan is what you need. A personal loan can help you with medical emergencies, high-interest credit card bills, home repairs or even a solo vacation if you need one. This is highly convenient looking at other loans such as a car loan/home loan). With these loans, you can only use the loan amount to purchase a car or a house and nothing else. A personal loan, however, doesn't carry such restrictions.

  5. Disadvantages: 1.High Interest Rate If you have a good relationship with your previous lender and have repaid your loan on time, then reapply for a personal loan to the same lender. They will offer you lower interest rates as the lender is aware of your credit behaviour and will want to retain you as a customer. That being said, you may not always be able to reapply with your previous lender. In such cases, we suggest that you look for a new trustworthy lender.

  6. 2.You Need a High Credit Score Most lenders that offer a personal loan look for a credit score of 700+ in their applicants' profiles. Again, since a personal loan is unsecured, it is a high-risk proposition for your lender. So, they will only sanction such loans to people who have good creditworthiness and a strong credit score. If you don't, be prepared to get a loan offer with a slightly higher interest rate.

  7. In Conclusion The above points illustrate two of the primary advantages and disadvantages of a personal loan, which will help you make a more well-informed decision the next time you need to borrow. Even if it's a low salary personal loan, ensure you apply for one only in an emergency and if you possess the repayment ability for it.

  8. Thanks For Visit. • Address for Correspondence:  • KreditBee, 3rd floor, The Royal Stone Park, No. 100, Above Honda Showroom, Sakshi Nagar, Pai Layout, BenniganaHalli, Karnataka 560016  Official Phone: 080-44292200 • Website : www.kreditbee.inOfficial Email Address: help@kreditbee.in 

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