A loan is basically a debt that is evidenced by note specifying the interest rate, principal amount, and the date of repayment. The loan issued must be repaid on time to the lender to avoid further harm to any of your assets that had been kept as assurance to the lender. While taking a loan, a borrower lends some money from the lender. These lenders may be people, banks, corporate societies and other sources. The money is paid through installments to the lender with some rate of interest. It is always safe to take loans from financial institutions like banks and corporate societies as they have monetized terms and conditions and low rate of interest as compared to other money lenders. Some of the popular loans that most of the people go for are personal finance, leveraged loan, PIK loan, refund anticipation loan, payday loan, syndicated loan, student loan, and title loan. Though these loans are helpful for many people but they have some severe disadvantages.


Disadvantages of loan

  • The loan is a long term debt. It means that you have to pay it for long period of time. You have to pay monthly installments. You have to cut out your salary or savings and pay the loan. Failing to pay the loan amount on time can cause harm to your assured assets.
  • You can face trouble if you miss the installment of loan by paying the penalties and might have to undergo with some legal issues. Most of your assets coming under loan guarantee can be seized.
  • Most of the times, it happens that you are not allowed to pay complete payment at one go, even if you have it. In this case you unnecessary pay the interest to the lender for long term.
  • The rate of interest is quite high on the principle amount and it cannot be borrowed by everyone.

Advantages of loan

Loans are advantageous for people because they offer:

  • Flexibility: The loans after getting approved can be used for any purpose. The loans are mush flexible if taken from friends or relatives.
  • Quick and Fast: The loans generally take an hour to approve or disapprove. If your loan amount is sanctioned then you will receive the amount within few hours.
  • Live savers: These loans make you out from critical situations and you can easily get money during emergency, if you have the guarantee equal or more to the amount you borrow.


I will personally suggest you to go with loans only if you fail to get the amount needed from friends or relatives. If you get the amount from them then you can pay them anytime without any interest. They also understand you situation and arrange for money when needed. You can easily pay them the borrowed amount in installments or at one go without interest.

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