Personal loans can be availed for any purpose and so it helps at any point you do not have cash. The rate of interest for personal loan is very low, so it is advisable to take a personal loan for most purposes, even for buying consumer durables. You should know the advantages and disadvantages of personal loans before going for it.

Advantages:

• Personal loans do not require you to produce any collateral or security, like other loans.
• There is no agent or middleman while obtaining this loan.
• Banks are always ready to offer personal loans.
• All that is required is that you need to satisfy the eligibility criteria.
• You may use the loan for educational or even holiday purposes.
• You can avail a personal loan during times of emergency when you are short of cash, since you need not answer too many questions to the bank.
• You may avail personal loans according to your eligibility ranging anywhere from Rs. 15,000 to Rs. 10,00,000.
• The payment period is up to a maximum of 60 months.
• It is better to avail a personal loan than to borrow cash on your credit card comparing the interest rate on both.

Disadvantages:

• The eligibility criteria are stricter in case of personal loans, since there is no security required and the paper work is minimum.
• The bank checks on you capability to repay more than any other loan due to the same reason.
• Since the bank has a higher risk while providing personal loans, they follow a list of approved categories of borrowers.
• Interest rates for personal loans could range from 12 percent to 30 percent, while the service charges and prepayment penalty are also very high.