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