Generally, people make their budget plan so tough that an additional expense will lead them to suffer a lot. Usually people have to repay the education loan, home loan and other additional expenses, which make their budget schedule tight. It’s impossible for many people to pay that expenses with only a single salary. In such situations, people opt for the personal loan interest rates, where they can get relief from their existing debts.
What are the pros and cons of taking a personal loan for clearing your existing debts?
Check for the interest rates:
Personal loan interest rates are relatively low compared to credit cards interest rates, as personal loan are unsecured loan, and you don’t have to put any collateral to be submit for applying this loan. However, the interest rate on unpaid credit card balances is higher when compared to personal loan. So, taking a personal loan is always a good option to pay off your debts using a personal loan, instead of paying your debts through credit card.
Flexibility in fixing the tenure and EMI:
Personal loans also provide you the option of fixing the tenure of your loan according to your own repayment capacity. Like credit cards, you don’t need the repay the complete amount in one time to avoid the high interest rates. Whereas, in personal loan, you can repay the loan amount within some time frame as per your requirements and also you incurred the low interest rates for loan in case of personal loan when compared to credit card payment.
If you have many debts and the due date are different. The chances of missing the due date will be high. If you don’t plan your repayment requirements correctly. Then you can have an option to repay all your loans by taking personal loan and can make only one account where you need to pay the amount collectedly at one place, no need to remember the different dates for repaying the loan. Also you can focus on the interest rates of only one loan.
Personal loan limitations
If you’re taking a personal loan to pay a very large amount, then it is not a good choice for you. As personal loan is unsecured loan, and the personal loan interest rates are somewhat higher than any other loan. If you are having unpaid previous loans and credit cards then it will effect your credit score and the chances of getting personal loan will reduced. In case, if the loan is sanctioned also it will ask you for the high interest rates.
Taking a personal loan
Personal loan is less risky for you than mortgage or home or gold loan as you don’t need to keep anything with the lender as a collateral.
For personal loan, there are both pros and cons. But, it is easy for you to take the personal loan, then any other loans. Before taking a personal loan you must go through the terms and compare all options to get low interest rates for loan. Don’t be in hurry to take the action before analysing different loan options.