KEY ADVANTAGES AND DISADVANTAGES OF PERSONAL LOANS AS YOUNG AFRICAN ENTREPRENEURS
Besides the traditional loans that have become famous among us, personal loans may offer better opportunities for us and here are the key reasons as to why personal loans may be an option, among the merits and demerits of personal loans.
They are flexible. Not like previously where the money loaned to you would have to serve whatever purpose you had borrowed it for like construction or buying a car, money gotten through personal loans is flexible and can be used to finish different tasks for example starting a business or constructing a house.
Secondly, a borrower does not require capital. Not similar to traditional loans where collateral security is compulsory, personal loans are much easier to obtain and this would be important especially to young entrepreneurs with the limited financial power to boost their dreams and ambitions.
They are easier to manage. Instead of having various debts with multiple lenders, it would be better to have a personal loan with a loaner so that you could pay a monthly fee and avoid stress attributed due to having multiple financial programs to run.
Despite having various positive attributes attached to it, personal loans also come along with a number of demerits which may include:
Penalties may be high for clients. In a situation where one fails to clear a debt, the penalty maybe too high for them to match up to. Which will therefore constrain them more after the failure to match the set financial goal by the financial institution.
The interest rates may not be appropriate for everyone. This depends on one’s credit base; people with less capital may have difficulty meeting a certain interest rate which shall be so easy for another client who has a wider or rather broader financial base.
Personal loans could accelerate one’s debts. Since it is easier to acquire loans through this channel, there’s a possibility that it could accelerate one’s debts which shall further lead them in financial turmoil.
In conclusion, although personal loans come along with exciting deals that are highly enticing, they are also escorted with challenges that may be a limitation towards your financial success especially if mismanaged.
