Personal loan: good or bad?

There are numerous reasons why you may want to apply for a personal loan. However, with the revolution in Fintech industry, how wise a decision is taking a loan, is a matter of concern. From wanting to renovate your home or buying a new car or running your business, you may want to take a personal loan for a plethora of reasons. Personal loans are definitely a nice way to access additional cash when you are running short of finances. They also tend to offer attractive interest rates when compared to credit cards and the like. When you need money, getting a bank loan is an instant solution. A loan bridges the gap between where you are with your college savings, scholarships and earnings from part-time work to where you want to be. Though loans and debts can be a real problem sometimes, personal loans can come handy when in need. Just like anything else, getting personal loans comes with a lot of positives and negatives. Moving ahead to the good side first, there are few reasons why applying for a personal loan and getting one is good.1

  1. Paying off debts: The amount you receive from personal loans can be put to effective use by clearing off any other debts that are making things difficult for you or the debts that were availed at much higher interest rates. Say you have a home loan or any such other loans, using the personal loan to clear them off is an ideal way as personal loan rates of interest are way better than most other loans.
  2. Medical Emergencies: It is a sad plight that medical emergencies are not always available at affordable prices and we cannot risk our loved one’s life. An ideal option when it comes to a medical emergency is getting a personal loan.
  3. Home renovation and other needs: When you feel that your home seriously needs renovation or you are shifting from one city to another, there is no better way than getting a personal loan.

Personal loans can come handy in many situations, but there are some scenarios where there are better choices than a personal loan. There is no doubt that a personal loan comes with a lot of responsibility. With the evolution and enormous changes in the Fintech industry, a lot of easier and more secure ways to raise funds have come up.

  1. An alternative to personal loans: Crowdfunding is an ideal alternative to taking personal loans to make your idea or start-up reach astronomical heights. The basic idea behind crowdfunding is to let a newcomer or entrepreneur meet potential investors, impress them with the idea or project and get the necessary funding. It can be a single investor or a group of investors. The crowdfunding happens at online platforms that provide an ideal stage to let the investors know clearly about the project or idea and to decide whether or not to fund the same.
  2. Peer to peer loans: Peer to peer loans aka P2P loans are the latest revolutionary idea of Fintech industry. A trusted P2P loan platform connects financers looking for better prospects than that offered by banks and people or entrepreneurs who are looking for easy and fast short-term loans. Earlier, there were no proper guidelines for these peer to peer loans. But now, with the evolution of Fintech industry, P2P loans are fast replacing personal loans.
  3. Short term payday loans: Every one of us might have faced a sudden and unexpected need for money and this short-term payday loans are aimed at helping in such situations. Since they have opted for a very short duration of time, they get repaid quickly, which is definitely an added advantage. You can opt for weekly, fortnightly, monthly or even daily loans. These are definitely a plus over personal loans.

The rapid change in the Fintech industry and alternative lending not only provide a path and access to reach more customers and raise funds easily, but they also overcome the geographical separations.

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