Taking out a private loan, a good idea or not?

At the moment you wish to take out a loan, you will immediately be able to determine that there are many different options on the market for this.

It is, however, the case that by no means all forms of credit just belong to everyone, on the contrary. Do you have a listing on the blacklist, for example? Then an ordinary bank will usually not want to provide you with a loan. In that case, however, there are still possibilities to take out a loan. The private loan is one of them. Is this credit form in practice, however, as interesting as it seems at first sight? We searched it out for you and in this blog article we have put together all the pros and cons with regard to borrowing money by means of a private loan.

What is a private loan exactly?

Undoubtedly, people will read this blog article who do not know exactly what a private loan is exactly. For these people, we will first briefly discuss this form of credit. A private loan is a type of loan that is not taken out with a bank or other financial institution . Instead, the agreement is entered into between two private parties. In practice, it often concerns friends or family members. The beauty of the private loan is that it can always be closed, as long as both parties agree on the conditions. Moreover, such a credit is often provided at very low costs or even completely free of charge.

What are the benefits associated with the private loan?

The concept of the private loan will naturally sound like music to many potential borrowers. There are indeed a lot of interesting benefits attached to it. We have selected all the advantages of the private loan for you and have placed them in the overview below.

1.) Anyone can borrow with a private loan

At first there is of course the advantage that everyone has the opportunity to borrow money by means of a private loan. This does not only apply to people who, for example, already have one or more (large) credits, which, for example, also think of those who are on the blacklist? The only thing that needs to be done to take out a private loan is to make clear agreements with the person you want to provide the loan. In other words, have you already been to different banks or other financial institutions and do not want to grant you credit for whatever reason? Then a private loan is an excellent option.

2.) Closing a private loan can be very quick

If you wish to take out an ordinary loan with a bank or another financial institution, you will always be able to determine that a not insignificant application period precedes the granting of the credit. That does not always have to be a problem, but that is when you need urgent extra money, for example. In this situation, too, a private loan can offer an excellent solution. At the moment that an agreement has been made and the person you are borrowing the money, this amount will simply be in his bank account and can in principle be paid immediately. The private loan is therefore one of the fastest forms of credit available on the market.

Deviating from the conditions is not immediately punished

In the case of various types of credit available on the financial market, it is true that, in principle, there is no or hardly any deviation. Do you do that? Then you run the risk of running into a very substantial fine. This can not only make your credit much more expensive, you can also (extra) get into the financial problems. Of course you will want to avoid both situations at any cost. By taking out a private loan, these risks are much less present. Perhaps the person with whom you have taken out the private loan does not mind that you are a few days late to pay the monthly repayment … as long as this does not happen continuously of course.

Are there any drawbacks?

The benefits described above will sound like music to many people. Many may therefore no longer be able to wait for a private loan. This is understandable, of course, but it must be said that there are also some not to be underestimated disadvantages associated with taking out a private loan. The drawbacks of this are clear on the basis of the overview below.

1.) A private loan can jeopardize your friendship

Studies have shown that just over 75 percent of all private loans are concluded between friends or family members. That is a lot. If everything goes well, that is not a problem either, but what happens when suddenly an unexpected situation arises, as a result of which you are (temporarily) unable to repay the credit amount? Or maybe the lender suddenly needs all of his financial resources, so he can recover the amount he borrowed from you early. Of course it is not very neat, but it can considerably acidify your relationship. So keep in mind that this risk exists when you take out a private loan. You do not have this risk when you simply opt for a personal loan.

2.) There is no control on solvency

The second disadvantage is also a very important one. At the moment that you take out a personal loan, a written agreement will be drawn up between both parties at most. A prior check in terms of solvency as is the case when taking out a personal loan, for example, is not available. This means that the party providing the credit is actually somewhat in the dark as regards the financial possibilities of the borrower. Needless to say, this always involves significant risks for the lender who can not be compensated or hedged.

Conclusion; is a private loan interesting or not?

In certain situations it can be absolutely interesting to take out a private loan. However, it is also important to keep in mind that there are some not inconsiderable disadvantages and risks involved. For this reason, it can still be a better choice to take out a credit with a bank or financial institution. In this way your friendship will be preserved or there will be no quarrel in the family. Moreover, the costs on credit do not have to be as high in practice as is often expected. For example, taking out a personal loan is often possible at a very interesting interest.