7 Pros and Cons for Taking Personal Loans for Your Financial Needs

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Do you need a considerable sum of money on an urgent basis to cover for your child’s higher education?

Are you planning for a family trip abroad?

A personal loan can be your best friend in such cases. Different reputed lenders, such as HDFC personal loans, are available in India who can offer you attractive personal loans online if you are in urgent need of money.

Personal loans online are a type of loans where a lender will offer you the required amount of money with the condition of spending the money back to the lender within a stipulated period. Of course, you need to pay an interest amount, the rate of which is dependent on factors such as your income, credit profile, loan tenure, and type of loan you avail. You may come across two different types of personal loans online-

Secured Loan: Here, the borrower avails the HDFC personal loans by pledging a property, any movable/immovable security or gold as collateral. The borrower can get the benefit of low personal loan interest rates and other favourable terms because of the less risky business proposition perceived by the lender in such cases.

Unsecured Loan: These are the loan types, where no security in terms of property or any other asset is required to be pledged by a borrower. Therefore, unlike the secured loans, it assures no cash conversion to the lenders (like HDFC personal loans) in case the borrower fails to repay the loan amount. The interest rates in such cases are on the higher side because of the higher risk involvement of the lender.

Just like medicine can have its own side effects, you should also be aware of the fact that a personal loan can have its fair share of positive and negative aspects. Given below are a few pros and cons of taking personal loans online for your financial needs-

Advantages for Taking a Personal Loan: –

It Acts as a Multipurpose Loan-

A personal loan can be the best option for you for fulfilling your dreams. You can avail personal loans online for satisfying any genuine need of yours. There are many loans which are fixed for an individual purpose (home, education, vehicle etc), whereas, for availing personal loans, you do not require any definite purpose. You can get a personal loan either for vacation, or buying a TV or spending tuition fees, etc.  Your lender about your intended purpose will ask no questions.

Fast Disbursal-

You can avail your HDFC personal loans within a short interval of time. The documentation and other processes associated with personal loans online are pretty simple enough and hence, do not require much time to complete. If you have provided all the required documents to the bank, and if there is no issue in your application, you can avail the HDFC personal loans in a jiffy. Sometimes, personal loans online are even approved inside a few hours. Hence, this loan can be taken in unavoidable or emergency circumstances, thereby giving the customer a kind of much-needed financial relief.

Flexible Loan Amount-

In case of personal loan online, an individual can satisfy his distinct need with the appropriate loan amount required for the purpose. As there is utmost flexibility related to the loan amount, anyone can decide on the HDFC personal loans amount to avail, depending upon his affordability and suitability. 

No Complex Documentation-

For personal loans online, you have to provide/upload some simple and basic documents to avail the HDFC personal loans. You simply need to provide the lender your KYC documents such as the identity proof, address proof and the proof of your income to avail the HDFC personal loans.  Most of the lenders have made the documentation process easier and quite comfortable for the customers. As a result, you can have your personal loans online sanctioned in a hassle-free manner.

No Collateral Required-

When you plan to take any loan, the only thing that may cause you a headache is the requirement of collateral or security. But, in most cases of personal loans online, you do not require to pledge collateral or security. If you satisfy the eligibility requirements for the HDFC personal loans, the banks will not ask for any collateral against the loan requested.

Flexibility in Repayment-

You do not have to face any hurdles while respending your HDFC personal loans. You can choose your tenure of repayment (which may be anything between 1 to 5 years) depending on your loan affordability. Lenders also provide easy and multiple payment options such as auto debit, ECS and PDC. Thus, personal loans online have made the process of repayment much easier for customers.

Cons for Taking a Personal Loan-

Huge Processing Fee-

The personal loans online usually come with a higher processing fee. This fee has to be paid by the customers in addition to the interests on the loan amount availed. Usually, the processing fee hovers in the range of 1% to 6% of the loan amount taken. Moreover, you have to pay the processing fee at the time of availing the HDFC personal loans, rather than spending it monthly. This can be an extra burden on the loan seeker.

Stringent Eligibility Criteria-

The banks or NBFCs follow some fixed rules and regulations while offering personal loans online. These guidelines are needed to be followed strictly by the loan seekers. Sometimes the lenders such as HDFC personal loans maintain stringent eligibility conditions such as higher income levels or higher credit scores for the customers while accepting their loan application. If you fail to meet these criteria, your personal loans online application can get rejected, even if you are in extreme need of funds.

Higher Rates of Interest-

Since personal loans online are mostly of unsecured types; they usually come with high-interest rates. These rates can vary in the range of 12 % to 20% p.a. which proves to be much higher than other types of loans. As a result, individuals might face difficulty in spending back the loan (such as HDFC personal loans) in time, if they do not have adequate resources to cover for the higher EMIs associated.

Prepayment/Foreclosure Penalties-

Personal loans online often come with different repayment tenures varying in the range of 1 year to 7 years. But, it’s no point waiting for the tenure to finish if you come to a position of respending the loan in full or part, even before the tenure gets completed. Now, if you decide to pre-pay the loan or foreclose it midway, you will be levied a hefty penalty in the form of prepayment/foreclosure charge. This is an extra expense levied on the borrower.

Possibility of Scams-

Another high risk of taking personal loans online is that some of them might not be genuine, at times. Some instances are observed where scammers offer the borrowers with a seemingly irresistible offer/ rates and steal the personal information and identity of loan seekers. Alternately, these frauds can also charge the borrowers a hefty processing fee for initiating a highly tempting personal loan offer and later disappear with the amount. This type of scam is referred to as an advance fee scam. Therefore, it is advised that you should do due diligence and read all related documents carefully before committing any personal loans online offer.

The Footnote:

Apply for your personal loans online through the efficient platform of Afinoz. The experienced professionals at Afinoz will help you with equitable comparison insights and the best in class support throughout so that you can get the best personal loan offers to suit your need and affordability. Moreover, you can avail all services from Afinoz, absolutely free of cost.