Personal loans: A double-edged sword for the middle class—Understanding the risks and benefits | Mint

People in the middle class struggle with financial needs that outstrip what their available funds can cover while dealing with medical crises along with major expenses including weddings or higher education. A personal loan serves as an ideal solution when urgent financial requirements exceed available funds. Users need to understand all the risks associated with these loans while using responsible borrowing practices for relief.

Personal loans

Personal loans exist without collateral and enable borrowers to spend the funds on debt consolidation while also enabling renovations or healthcare needs or university tuition. The interest rates for such loans are established according to borrower income and credit score and lender regulations and necessitate regular fixed payments through EMIs. The interest rate of personal loans typically ranges from 10.50% to 24%.

in conclusion, the middle class finds personal loans to be their financial backup option which they use to pay off debts and update homes and resolve emergencies and finance school expenses. But borrowing responsibly is essential. 

Loan seekers should research lenders before borrowing and study their repayment ability as well as carefully examine all terms found in small text to escape hidden costs and always remember that personal loans carry higher interest rates in comparison to other loans.

(Note: Raising a loan comes with its own risks. So, due caution is advised)