The COVID-19 pandemic has turned the world upside down. Most people find themselves in financial strain and cannot get rid of it due to the unavailability of monetary resources. The lockdown administered in most countries has put many businesses under tremendous pressure to consider layoffs and close their operations

If you are also troubled by the current situation, then here are tips for getting a personal loan to pay off your debts and finance your home expenses is a wise choice.  Whether it is related to debt consolidation, a particular purchase, or funding an educational program, the loan can be the answer to all of your financial queries.

But since specific details of the borrowing can be somewhat confusing, it is good to have a refined look at them. In this article, we will discuss the pros and cons of acquiring a personal loan, which will enable you to make an informed decision.

Following are the advantages and disadvantages of obtaining a personal loan:

Pros

Easily Manageable

A personal loan is useful concerning the ease it provides. Although the second-best alternative to them is a credit card. However, managing the credit card account can be difficult. Since different credit cards may have varying spending limits, repayment deadlines, interest rates, and policies of the lender, it’s challenging to keep track of all this.

On the other hand, a personal loan has a fixed interest rate and usually offers a one-time, calculated payment. Secondly, it is convenient because you can acquire a personal loan online. The process is now easy and expeditious with the use of advanced technology. It takes little time to receive a response and have your prior credit record tracked. Sometimes, you are lent the amount within a few hours of filing a personal loan application.

Multipurpose

The first thing about personal loans that makes it stand out from the rest is that it is versatile. That means that other loans serve only specific purposes. Some are borrowed for mortgages, to buy a vehicle, or to further an educational program. You can obtain personal loans for any purpose, which makes them versatile. Secondly, you can personalize it according to your specific borrowing needs.

Reasonable Rates

While some people say that the interest rates offered by personal loan lenders remain high, there is a slight difference. Whether the rate is feasible is dependent on your lender. If you can find the right financer, you may get the cash at your desired rate. By and large, these are quite reasonable as compared to borrowing through the credit cards. The second important factor regarding the rates is whether you have a favorable credit score. In such a case, the Annual Percentage Rate (APR) could be as low as five percent. Conversely, with a credit card, it may at least be at 13 percent.

No Collateral

Another good thing with most personal loans is that you do not need to collateralize any of your assets. That provides much-needed peace of mind because you do not have anything at stake. Also, this makes the process truly easy for people who do not have considerable property, invoices, or a vehicle to keep it as collateral to borrow loans.

Cons

Origination Fees

Personal loans lenders charge you a processing fee, which is submitted in one-go or as a lump sum amount. That is additional to the interest rate. While the percentage may vary, it is usually from one to six percent. As opposed to other loan types, you have to pay the amount upfront when you borrow the loan.

Borrowing Limit

Another disadvantage is preferably from a psychological point of view. When you have such a secure method of acquiring the loan, you tend to borrow it frequently. That can result in a pile-up of any interest due as well an increase in stress, related to the repayment deadlines.

Online Scams

Technological processes have been witnessing tremendous advancement, which is, in turn, giving rise to online scams. Any lender that is available online understandably comes with its own set of downsides. So, there are many scammers online waiting to steal your money through fraudulent loan schemes. The easiest way to avoid them is to remain discreet about your account details and choose a credible lender.

Conclusion

Personal loans have become the need of time because of the ongoing COVID-19 lockdown. Instead of layoffs and compromising on the critical financial functions of your organization, it is better to borrow a personal loan. These have favorable payment terms as well as a shorter application process. If you have been thinking about acquiring some finances in the current situation, you may apply right away. Last but not least, remember to check-out any concessions being offered by the government due to the outbreak so that you do not miss out on any benefit.