Pros and Cons of Taking Out a Personal Loan | The Simple Dollar

• Personal loans are flexible forms of credit where they can help you reach various financial goals.
• They allow the borrower to use it in every situation imaginable like emergency expenses or debts that you might have.
• Personal loans can also be used to consolidate debt if you have many, into one loan and make debt less confusing.
• It is one of the most popular borrowing tools on the market because it does not require collateral.

As good as it sounds, personal loans have its own disadvantages such as:

• Some personal loans have higher interest rates because since it doesn't require collateral and are unsecured, the risk of not paying the lender back is high; and
• It can affect your credit score, either short-term or long-term negative effects. By adding debt to your financial profile, personal loans can and is going to affect your credit score.