Hey folks, having a tough time borrowing personal loans from Banks? If yes, then there is no such big thing to worry about. This is because the procedure of getting a personal loan has become very complicated. A personal loan is nothing but a loan with a fixed rate of interest with a fixed figure of repayment. You can also opt for the best personal loans for credit card. A Personal loan is considered as the best in the market. But now there are any new procedures introduced which are made compulsory. There are options for taking a loan from banks or loan from personal lenders. You should know that there are still many benefits of taking a personal loan from a bank with some ill-effects too. In this article, you can get a clear look at them.
Pros are as follows:-
- A huge sum of money with a long repayment period
You can take out a huge amount of money as a personal loan with Banks. There is a major limit over the maximum amount of money which can be borrowed. In addition to that, the time of repayment is also quite long. You can take loans for 5-10 years and pay a fixed rate of interest.
- Low documentation
You would know that sanctioning a loan from Banks requires many documents. This documentation can become a huge issue and result in a delay. There is no such thing for personal loans. This is because the legal documentation process is minimal and less paperwork is involved.
- No agent
There is no agent involved between you and the bank. Usually, a small percentage of the loan amount is to be given to the middlemen. Here, there are only two parties, and there is no middle cut evolved. In this case, the expense of the agent is cut down.
- Quick approval
There are no major legal procedures which you have to pass to get a personal loan. This is because this is the loan for people who are not comfortable with the terms and conditions of other types of loans. Here, you don’t have to pass through legal procedures which take months to get completed. You are not entitled to the waiting period because the process of getting a loan is not long.
- No need for a clean credit score
You would know that a clean credit score is required when you want to opt for a loan. This is not applicable to getting a Personal loan because of the less legalised procedures. Even if you do not have a clean credit history, you can still receive a respectable amount of money from the lender. Therefore, this is also one of the major pros of getting a personal loan from a bank.
You can use the amount which is sanctioned to you as the personal loan on yourself. This can be done by using the money for different purposes of your own. This includes usage of the money for the construction of a new house, pursuing education and also for other Personal expenses. You do not have to worry about not getting a loan because a personal loan is a multi-purpose loan.
Cons are as follows:-
- Past Credit history
For a person to get sanctioned, your financial report is monitored. This involves your credit standing and previous debts. If you have not paid the pending money, a personal loan will not be allotted to you. Your credit standing should be clear because of the monitoring reason. If there is no debt pending in your name, there will be no issue in getting a personal loan.
- Need for an Account
This is one of the major cons of getting a Personal loan from banks. You need to get a bank account on your name with the bank you intend to opt for a personal loan. This is because of the security reasons, and no loan is issued on any other bank account. Only if you are an account holder with the respective bank, a personal loan will be issued to you.
- Strict repayment clauses
Sometimes, it becomes difficult for you to pay a fixed amount of money till the end date. In the case of nonpayment, strict action is taken on your name. This involves a high percentage of interest charged. This interest can become a huge issue for you in case of multiple nonpayment’s. The loan amount will also rise with the addition of penalties due to nonpayment.
- Ill-effects of Prepayment
If you are not familiar with the term Prepayment, then this one is for you. When you are bound to repay the loan with interest, it is automatically deducted from your total balance. This is quite common because almost every loan provides an allowance for the purpose of Prepayment. This is because the bank receives a large sum of the principal amount in one time. There is no waiting period included in this method of paying back the money, but the interest rate is a loss to the lender. Usually, banks don’t mind this, but at the end of the day, it is a loss.
- Possibility of theft and scam
There is always a possibility for theft and scamps when you are dealing in monetary terms. This is because the only thing which runs this world is no money. You can get in trouble by not paying the interest money, and the scam will be imposed on you. You cannot get out of this because at the end of the day you have not paid back the money you owe to the bank. Therefore, this is a major conn of borrowing money as a personal loan from the bank.
These are other some major pros and cons of borrowing a personal loan from the bank. You should consider the need for money and make a decision for a loan. We hope this article will help you out.