What are the Advantages and Disadvantages of a Personal Loan?

What are the Advantages and Disadvantages of a Personal Loan?

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Like every financial product, personal loans too, have some pros and cons. They have lower interest rates than credit cards. On the other hand, if you use a credit card to pay a bill or take out an advance is quite easier than going through a typical loan application process. To know more pros and cons about the same, read on.

Advantages

In case of any medical emergency, personal loans are an easy way to take out a big chunk of money in a short period of time. Some people might consider it the only savior when they do not possess any spare capacity when it comes to their credit card or mortgage offset account. Another advantage of personal loans is the low interest rate. The average interest is about 5 percent lower than the average credit card interest rate.

Hence, many people consider personal loan to repay the higher-rate credit card debt. The personal loan is designed with a structured repayment plan, which further has two benefits—it shows the light at the end of the tunnel and you will be forced off to repay the debt in regular installments. Just a friendly caveat, cut up your credit cards. Because if you use them to pay up more bills, you will double up your debt in no time—credit card debt as well as the personal loan.

One of the bonus advantages of personal loans is, even if you have a bad credit and you need a personal loan, you can get Personal Bad Credit Loan from BC loans with ease, no matter what your credit rating is.

Disadvantages

Admit it, going through a typical loan application is time-consuming and frustrating. Borrowing some bucks from a credit card is quite easier. Sometimes, it is even cheaper. When you apply for a personal loan, it further costs you some fees and interests with every installment too. But if you take out some money from your credit cards and then repay this loan in full during your interest-free period, you won’t have to pay a penny in borrowing costs. But, yes not everyone is that disciplined or with such financial capacity to implement this strategy successfully.

Another disadvantage of personal loan is that many people who go for this option do so because they spend too much and save too little. A personal loan alone wouldn’t just solve this problem. It makes it worse because it will make you spend more money in the form of interest and/or fees.

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