Unlike the traditional loans that have become popular among us, personal loans may pose
better opportunities for us and here are the key reasons as to why personal loans maybe an
option, among the advantages and disadvantages of personal loans.
A borrower does not require capital. Unlike traditional loans where collateral security is a must,
personal loans are much more easier to acquire and this would be beneficial especially to young
entrepreneurs with limited financial power to man their dreams and ambitious.
Secondly, they are flexible. Unlike previously where the money loaned to you would have to
serve whatever purpose you had borrowed it for like construction or buying a car, money
attained through personal loans is flexible and can be used to accomplish different tasks such as
establishing a business or constructing a house.
They are easier to manage. Instead if having multiple debts with various lenders, it would be
better to have an personal loan with a loaner so that you could pay a monthly fee and avoid
stress attributed due to having multiple financial programs to run.
Despite having various positive attributes attached to it, personal loans also come along with a
number of disadvantages which may include;
The interest rates may not be favorable for everyone. This depends on one’s credit base, people
with less capital may have difficulty meeting a certain interest rate which shall be a walk over
for another client who has a wider or rather broader financial base.
Penalties may also be high for clients. In a situation where one fails to clear a debt, the penalty
maybe too high for them to match up to which will therefore frustrate them further after failing
to match the set financial target by the financial institution.
Personal loans could increase one’s debts. Since it us easier to acquire loans through this
channel, there’s a possibility that it could increase one’s debts which shall further land them in
a financial turmoil.
Conclusively, although personal loans come along with exciting deals that are extremely
appealing, they also come along with challenges that maybe a limitation towards your financial
success especially if mismanaged.