Personal Loan: The Pros and Cons | The Finance Firm

Sometimes people have tight budget and this makes their financial matters are very limited. However, it is very difficult to find means on how to look for people who can lend money to us. Now, there are various lending sector both private and public division is able to provide us with personal loan.

Personal loan features

This type of loan is indiscreet. There are no assets, such as a property, offered as collateral. This is the main variance among personal loans and other kinds of loans.

Higher rates than other. Since most of the personal loan is unsafe. There are no assurances to the clients with regards to the rate of interest for their loan. It may vary depending on the credit scheme that they have applied. This applies to credit cards that are commonly used by people.

Fix terms. The interest rate for this type of loan has its fixed schedule or deadline of payment. If the client is unable to pay the interest on the exact date, the amount lent will increase.

Occasionally, a rotating line of credit is offered. Infrequently, this type of loan can also work as a rotating line of credit, like a credit card. In such a case, the interest rate is fluctuating.

No tax benefits. The interest of this loan is not tax deductible, different from the interest of mortgages or home parity loan.

Advantages

If you do not have any properties such as home or land title, and you are suffering from financial problem then this type of loan can give you the advantage. You can have the money by applying for a loan to any lending corporation that helps their clients for monetary concern. It is advantage for people who have tight budget and needs money at the soonest possible of time.

Disadvantages

However, the disadvantage of this type of loan is unsecured and it is not tax deductible. The interest rate varies as well depending on the amount of being lent. It has fixed termed well wherein the client should pay the interest on or before the schedule of payment. The properties such as home equity have various interest rates as well. Unlike to other types of loan, this can be very disadvantage to people as well.

If you are planning to have this kind of loan, you should always consider the advantages and disadvantages of the loan in order for you to determine if this kind of loan can fix your financial problems. Otherwise, you will end paying more than what you have lent if that you were not able to pay the exact amount based on the interest of your total lent money. You should weigh them both.

This is a guest post from contributing author Arindom Chanda. Arindom is writing for Daily Chump. Daily Chump is an online portal for health and wellness news. Check more about them.

Source: http://thefinancefirm.com/businessfinance/personal-loan-the-pros-and-cons/

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