If you default on a mortgage, the bank could repossess you home to recover part of their money. When it comes to personal loans, however, the only thing securing it in many cases is your own reputation unless you plan to get a secured loan.
In these situations, fast loans online South Africa from an online lender can get money into your account quickly sometimes on the same business day you apply for the loan. IF you are considering taking out an instalment loan online, you will have options only lenders and branch based financial institutions that also offer loans online. Neither is better than others, but there are some general pros and cons of taking out a personal loan online.
In this article, we will discuss the major pros and cons of personal instant loans in great detail.
- No Risk To Personal Property
There are personal loans that are secured and there are those that aren’t. When a personal loan is secured, it is backed by collateral that your lender can take if you can’t pay off your loan. The good thing about having an unsecured personal loan is that your personal property usually isn’t at risk in the event of a default. So you won’t have to worry about losing your home or any of your assets if you get laid off and making on-time payments becomes difficult or impossible.
- Application Process Is Simple
As there are other lenders besides banks and credit unions that offer personal loans, the process of getting one isn’t as complicated as it once was. You can apply for a loan from a peer-to-peer lending site from your home and it is possible to get approved for one in less than 24 hours.
- If you default, your lender could come after you
Even if a personal loan isn’t backed by a particular piece of personal property, a lender may still be able to place a lien on your assets in order to secure repayment. In order to obtain lien, a lender sues you in the court. In addition, to paying or the original loan amount you borrowed and late fees, you could be forced to pay for attorney fees and court costs.
- Rates and Payments are Higher
Since unsecured personal loans are riskier than a loan secured by property, lenders tend to charge higher interest rates. How much higher the rates are depending on your credit score and amount of money you are borrowing. It is important to note that lender may hide a portion of the higher interest rates in upfront fees such as loan origination and application fees.
Unsecured personal loans have their advantages. You can obtain a loan online without going through a strict underwriting process and you can use the loan to cover a variety of expenses like unpaid medical debt or a home improvement project. But unsecured personal loans can be risky as well and you might have to settle for higher interest rates. Check out here to learn 401(k) loan in great detail.