Advantages and disadvantages of a personal loan
Before you take out a personal loan, it’s important to do your research. Borrowing money can give you access to the money you need to pay off debts or make a big purchase, but it means you need to be confident you can make repayments towards the loan on a monthly basis.
- Repayments are usually fixed so you know how much you can afford to pay back per month
- The interest rate is usually fixed with no fees payable
- Choose the repayment terms to make it more affordable.
- You should be sure you only borrow what you need and keep within your monthly income
- The interest rate on smaller loans over short terms can be higher than other types of borrowing
- Depending on the type of loan you apply for, you may have to pay additional loan fees.
If you’ve done your homework and have decided to apply for a loan, the next step is to choose between a secured and an unsecured loan. A secured loan is tied to an asset you own, such as your house or car, while an unsecured loan is not. Which type of loan is better for you will depend on your personal circumstances.
Visit our secured and unsecured loans pages to find out more about the benefits and potential risks of both types of borrowing.