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Pros and cons of personal loans

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The life of modern people cannot be imagined without additional costs. The World Wide Web has become so common that now it is even possible to borrow funds without leaving your home.

This allows you to solve many problems if you suddenly do not have the necessary amount of money on hand, and there is no one to borrow from, or you do not want to do so at all. Various types of loans, including personal loans, always come to the rescue. Today we will talk specifically about the advantages and disadvantages of personal loans.

The personnel owes their demand to the fact that they have many benefits. They play an important role in the hectic pace of life of a modern person.

Advantages of personal loans

  • the speed of processing a request to receive funds – takes from 5 to 15 minutes, less often up to half an hour;
  • the decision is made in the form of an SMS or it can be a call from a bank or microfinance organization offering a personal loan;
  • the minimum required package of documents: as a rule, it is a passport. Sometimes they ask to write a number or take a photo of a bank card;
  • It is not necessary to go to a banking institution or MFO office if the loan is taken online: it saves you time and you do not need to queue.

Minimum requirements for potential borrowers:

  • US citizenship, over 18 years old;
  • Permanent residence permit;
  • Sometimes you may need a steady source of income. However, microfinance companies are not always interested in this in order to grant you a personal loan;
  • A large application approval rate – Online personal loans are given to many, even people with tainted credit histories;
  • Many convenient ways to obtain a personal loan: money transfers, bank cards, electronic wallets, and sometimes a phone number.
  • Transparent and understandable terms. Only at an MFI, you will immediately know how much it will cost to obtain a personal loan. Nothing could be easier to think of. Enter the required amount and term on the site to see how much the overpayment will be. Even before the loan is issued, you will know the amount of all payments;
  • You can get a loan or instant cash from even with an imperfect credit history. The most common reason for denial is credit history information. In the past, many citizens had trouble paying off loans and borrowings. Banks often turn away these customers. MFOs, on the other hand, know how to work with them by issuing a personal loan without questions.
  • The ability to correct an incorrect credit history. Another advantage of MFIs related to credit history is that small loans can be used to correct it. If you have an imperfect credit history, chances are that you will not be able to get money from a bank but from an MFI. After receiving and paying off several loans on time, your chances of getting a large amount from the bank will increase and this will positively affect your credit history.
  • Simple refund scheme. For personal loans, the payment schedule is as simple as possible: after the expiration of the term when using a personal loan, or earlier, you must pay the full amount back at once. That is what the client received from the MFI and the accrued interest. In verified MFIs with good loan terms on the first personal loan, there is no such interest. The borrower returns the same amount that he has received.

It’s hard to disagree on the importance of the benefits of lending, including a personal loan. However, everything has the other side of the coin. This has not been spared from personal loans issued online.

Disadvantages of personal loans

It should be said right away that the presence of deficiencies in personal loans is not that critical as long as the correct and reasonable approach is applied. In fact, with a rational attitude, they can sometimes help a lot. For example, if there are several days left for salary, and the finance stock is close to zero. Another similar situation can be attributed to a sudden illness or car repair. However, if you want to apply for a personal loan, you must remember several important disadvantages.

These include:

  • interest rate increase. In terms of benefits and overpayments, personal loans are far inferior to other types of loans. It will be much cheaper to apply for a personal loan in a bank than in micro-organizations (especially if you provide a certificate of income). But this requires much more time and effort;
  • possible technical failures in the work of the sites of credit companies: sometimes it is impossible to enter your personal account or there is an error in the system when paying a personal loan. This can also cause a lot of inconvenience when it comes to online loans;
  • Hidden commissions or imposition of unnecessary services: many times in a hurry people read the contract carelessly or not at all, there may be hidden commissions in it and the final amount will be much higher than originally declared. This leads to delays and the formation of a large amount of debt;
  • they can also impose services: most of the time it is some type of insurance or improvement of the credit history in a remunerated way. When closing a debt, all banks and MFIs must send information about this to the credit bureaus for free.
  • small loan amount. In fact, if you need hundreds of thousands or a million dollars, personal loans will not work for you. The essence of microfinance is tackling urgent tasks that require small amounts of money.
  • short term. The same applies to the period for which the money is issued. It is usually up to 30 days, and in some cases it can be up to 4 months.

In general, there are serious advantages and disadvantages. But it is obvious that when you weigh the pros and cons, a financially savvy client can benefit from personal loans.

Making a personal loan in microorganisms does not require a less reasonable and careful approach than the loan in banks. Personal loans have their pitfalls. Furthermore, the electronic format of the loan contract and the code sent (received in SMS) are similar to the usual ones. Still, they have the same legal effect.

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