Before you take a personal loan....THINK!

Personal loans are easy to get and has its pros and cons:
Pros
No collateral - Unlike other types of loans, you don't need to produce any collateral, or security, to avail of a personal loan
Can be taken for any reason - Normally a personal loan is just that - for personal use. Once you satisfy the loan eligibility, the banks give you the loan irrespective of how you put the money to use
Minimal paperwork - banks normally do not ask you for more than a few critical documents for approving a loan

Cons
Strict qualifying criteria - because of minimal paperwork and no security, qualifying for a personal loan is a strict affair
High interest rates - the interest rates for personal loans are very high and second only to the extremely high interest rates charged by credit card companies for credit card cash advances
Lots of fine print - the loan agreement has a lot of clauses in fine print, which one needs to understand thoroughly before opting for a loan
When is it okay to take a personal loan?
Paying off your credit card dues - personal loans make sense when you have to pay off huge outstanding amounts on your credit cards. The interest rates charged by credit cards are very high, sometimes amounting to 45% per annum. Therefore, taking a personal loan to pay off the credit card turns out to be a good option to reduce the amount of interest you pay.
An urgent requirement for cash - because of minimal paperwork, getting a personal loan is a fast process. So if you are really in a tight spot and need some urgent cash to bail you out, personal loans make sense
It is important to understand that personal loans are a good option only if the amount you require is not very big and your monthly budget can easily fit in the added EMI expense. Exercise the option of taking a personal loan, only because you have no other option and it is possible to pay it off in as less a time frame as possible to help you save on the interest cost.

When is it not okay to take a personal loan?
Financing the home improvement - in case if you are looking for doing some repairs to your house, opting for a personal loan is not necessary. You can do these repairs with a home improvement loan
Buying a car - if you are buying car, a car loan would take care of your needs. You do not need to take a personal loan for that
Speculative purposes - Never take a loan to invest in stock markets or other speculative purposes. This is nothing short of a gamble where you might lose out the money invested. Shot term speculative investments are not a wise option to use your money for especially in the instance of having to opt for a personal loan.