Select Multi-purpose Credit or Unsecured Loan
It cannot be denied that money is one of the main needs in this modern age. Not infrequently you need large amounts of money for sudden needs. One solution that you can use is credit or a loan. This time Mr. Bumble will discuss two types of credit, namely Multi-purpose Credit and Unsecured loan to make it easier for you to choose the right credit.
Advantages of Multi-Purpose Loans
Multi-purpose loans are often considered negative when compared to Unsecured Credit due to the existence of valuable assets that must be used as collateral for loans. However, multi-use credit has several advantages that cannot be compared with Unsecured Credit:
- High Loan Limit. One of the big advantages of multi-use loans is the high loan limit. How come? One of the reasons banks provide large limits is because of the guarantee of assets as a loan condition. Thus, the bank has anticipated losses if the customer fails to pay.
- Longer Tenor. A number of banks provide a fairly long tenor for multi-use loans, even up to 10 years or more. The aim is to anticipate the ability of customers to repay loans in very large quantities.
- Flexible usage. As the name implies, multipurpose credit can be used for various purposes. Unlike Unsecured Credit which is usually used for consumptive purposes, multi-purpose loans can be used for several purposes, for example for business capital. The bank will provide a loan regardless of the purpose of the loan, provided that there is a guarantee required.
Weaknesses of Multi-Purpose Loans
After seeing the various advantages, of course you become interested in applying for multi-use loans. However, here are some multi-use credit weaknesses that you can consider before taking it:
- Must Have Guarantee. If you do not have valuable assets to be guaranteed as a loan, then you cannot apply for multi-purpose loans. One alternative solution is to take Unsecured loan.
- Risk of Loss of Valuable Assets. This is one of the main problems of multi-use loans. You are at risk of losing your valuable assets if you fail to pay. By applying for a multi-purpose loan, we recommend that you plan well the purpose of using the loan and the details of the return every month to avoid losing your valuable assets.
- Longer Submission Process. The bank will need more time to assess whether the assets submitted are in accordance with the value given. For example, if you provide a guarantee that is not in accordance with the amount of your loan, then the bank will ask for additional assets to cover the nonconformity.
Advantages of Unsecured loan
As mentioned earlier, if you do not have valuable assets to be used as collateral, then the alternative that can be chosen is Unsecured loan. What are the advantages of this product? Here’s the review:
- Easier Submission Terms. Unsecured Credit is given without any guarantee terms from prospective debtors to creditors. Completeness that is usually requested is only a photocopy of ID card, family card, and last month’s credit card payment record and fill out the form.
- Disbursement of Funds Faster. Another advantage of Unsecured loan is that funds can be directly used for urgent needs. Because there is no collateral that needs to be checked by the bank, the funds can be liquid in a short time.
- Banks that Offer Very Many Unsecured Loans. You don’t need to worry about finding a bank that offers Unsecured Credit. At present, almost all banks provide loans without collateral. Even some banks are heavily marketing it given the high demand for this product.
Weaknesses of Unsecured loan
Unsecured loan certainly also has some weaknesses besides its various advantages. Here are some of the weaknesses that you need to consider before applying for Unsecured Credit:
- Relatively high interest. Because there is no guarantee needed in the submission, the bank anticipates the loss by increasing the interest on the loan.
- Must have a credit card. Many borrowers fail to take Unsecured loan because of this condition. Banks generally provide 1 year credit card ownership requirements or at least become users of the bank’s payroll services.
- Relatively Short Tenor. Because the loan limit granted for Unsecured Credit tends to be small (usually only up to Rp. 200 million), the tenor is also relatively short. Therefore, the amount of installments per month that must be paid is generally quite large.
Choose the Right Credit for You
The multi-use and Unsecured Credit loans discussed above are only part of the loan products available. Try to carefully consider the advantages and disadvantages of the product before you make a decision. The choice of loan product types can have a big influence on your financial planning.
Do you know the advantages and disadvantages of multi-use credit and other Unsecured Credit? Leave your comment below . If you have questions, please submit your question in the column below. Our Financial Planner is ready to help you, thank you.