Pros
- You do not have to pay the loan back immediately. You are often given a time frame between 3-10 years to pay back the borrowed money which means you do not have to stress about paying a large amount back in a short space of time.
- Lenders often offer a fixed interest rate. This means you will know exactly how much you are required to pay back. This also gives you an opportunity to plan ahead to ensure you are completing the payments on time and there will be no surprises with added interest.
- You will be able to afford something that would usually take years to save for. This could be for home renovation, business investments, or personal events. You have the money in your account there and then (after your application has been approved) and this saves a lot of time saving.
Cons
- Bank loans can be difficult to obtain. Banks are particular about who they lend their money to (understandably) and who is going to be reliable to pay it back on time. They look for spotless credit scores, which can take a long time to achieve. For small businesses, it can also be difficult to obtain unless you provide proof of great financial responsibility.
- They usually come with a strict repayment schedule, and this is very rarely flexible. This means you will have to make sure you are making the payments on time, and there is enough money in your account to cover it each month, including the added interest.
- Processing fees should also be taken into consideration when applying for a loan. Lenders will often charge the borrower a processing fee which adds more money onto the loan process. The larger the loan is, the higher they can increase the processing fee.
