Finance

The Pros and Cons of Availing a Personal Loan

As an adult, you have financial obligations to settle every month. You may be working full-time, but the salary is sometimes not enough, especially when you have other things to buy. Let’s say that you would like to purchase new furniture, home appliance, gadget and repair or remodeling needs. Now, the easiest way to get these items would be to apply for a loan. As long as you have a regular job or properties, borrowing money is easy. Actually, even entrepreneurs have debts to pay and the money that they borrowed are used as their capital or fund to run their business.

If you would like to apply for a personal loan, then your first step is to scout for companies like the Liberation Loans online and inquire about their policies and requirements. You also need to find out how long they process applications. If you are in a hurry, then look for a company that is quite fast in releasing funds. It would be great to read customer reviews and how they manage to answer complaints, too. However, if your friends have recommendations, you should also check their services.

Anyway, is a personal loan your only option to fund your financial needs? Don’t you have a friend or relative, who can lend you some money? I supposed, you know very well that there are companies, which are committed in lending services. Sometimes, loans are indeed good, but may be risky, too. Therefore, you better think twice before dealing with lending companies.

Personal Loan

Are you aware that a personal loan is unsecured? You often apply for this from the banks or private companies. Most money lenders base on a criteria when it comes to the amount of money that you can only avail. For example, they look at your payroll at check on your income and employment history as well. Aside from that, a representative may also come and visit your home. Some of them inspect your property and belongings, too.

This is not the same with investing in a car or home from banks or real estate. Most borrowers do not need a collateral when availing of this. For you to be eligible, you have to make sure that you are capable of repaying the credit. You have to pay the lent amount with interest for 1 – 5 years, depending on the approved application. Now, will you go for this type of transaction or not? The answer will always depend on your personal needs and circumstances.

The Pros

Since you do not need to present a collateral, then it is ideal for individuals, who do not own a house or a car. Actually, if you have hidden assets or properties, then these are secured because you didn’t use it as a collateral. Once you can’t afford or stopped paying for your monthly dues, your collateral may be turned over to the lending company.

Another good thing here is that, you do not need to present a lot of documents. Only minimal requirements must be submitted. For example, they will need a copy of your personal identification, billing address, certificate of employment and payroll. After sending these copies, you will just wait for a few days and here comes the money – it’s that fast. Some may even approve it within 24 hours, which is good for emergency purposes.

The Cons

What’s really bothering here is the high interest rate that they will collect from you every month. Actually, some companies even take the interest already from the fund that you are supposed to receive. Therefore, there you will receive less than the amount that you applied for. This is, indeed, disappointing, that’s why you have to know their policies. By the way, go to this site for further reading on interest rates.

For example, you have applied for a 5 year loan. But after 2 years, you would like to pay half of it because in your thinking, they can reduce the interest rate. This is not possible and even if you wanted to pay the rest of the debt, you will still pay the interest for 5 years, since that is what you have applied for at the very beginning.

About the author

Paul Petersen

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