How many times have you heard a family member, a friend, or a co-worker that a personal loan is a bad idea? How many times you have doubted to apply one because you aren’t sure if you need it if it’s worthy or a good deal?

Today, let’s take a look if getting a personal loan is truly a bad idea. When is the time it becomes a bad idea and you shouldn’t pursue it even if you want it.

First, Let’s Define What Personal Loan is?

A personal loan is a process of borrowing money from a lender to fund your own needs or expenses. There are two types of personal loans namely, the secured and the unsecured personal loan.

The secured personal loan requires collateral. Collateral is ownership (such as a house or vehicle) that you can provide with the lenders if you’re not able to pay the loan.

On the other hand, the unsecured personal loan doesn’t require collateral but the application mostly depends on your credit history.

As companies advertise it, you may encounter different terms such as emergency loan, home improvement loan, medical loan, vacation loan, and many more. Don’t be confused with it because all of these fall under a single umbrella – the personal loan.

How Does Personal Loan Works?

Similar to other types of loans, a personal loan starts by choosing the lending entity. This is commonly offered by banks or private lending companies.

On a personal note, you can pick two to three lending companies and compare the terms and agreement. Let’s say you plan to apply for a 20,000 peso loan, compare the terms and agreement on the companies you have picked. Check the interest rate, the payment terms, and other fees. Make sure that you understand every inch of the terms so that you won’t get surprised.

After that, you can complete the requirements and wait for the release of the loan.

Is Getting a Personal Loan a Bad Idea?

Now the question is, is getting a personal loan a bad idea?

Well, it depends but there are several instances of how a personal loan becomes a bad idea.

  • It’s a no-credit-check loan – If the lender doesn’t consider checking your credit history, there is no proper assessment of how you can afford the loan. An easy requirement means higher risk at their end and can be higher interest on yours.
  • You’re having problems in managing debt – If you have already applied for a loan before and you found yourself trapped with it, probably it’s about time to think twice or thrice if you need it. Otherwise, you need to come up with a strategy on the paying method or you may start developing a new habit or disciplining yourself on your financial means.
  • You have other alternatives – Before applying for a loan, ask yourself the main reason why you tend to apply for it. Is it for medical needs, for the tuition fee of your children, for your dream vacation, for home improvement, or you just feel like you need to? You need to make sure that it’s a need, not a want.

Then, check the amount you need. Is there an alternative way other than having a loan such as savings from your bank account or coin bank? Will it be enough?

You can check other options too, such as company loans or others with a lower interest rate as long as it’s a reliable company or source.


Having a personal loan isn’t always bad. It depends on how you would spend and manage to pay it.

Before applying, make sure that you master how it works and how you can take advantage of it, or else, you’ll find yourself having a hard time paying or managing it.

If you’re having doubts, think about it twice or even thrice. Compare various lending companies and by time, you’ll be able to decide and choose the best option for your personal loan.

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