To get a Bank Loan or Not: Learn the Pros and Cons

Often, we go to the bank not only to save our money but to get a loan, such as a car loan, housing loan, or even an educational loan.

Some banks give their clients credit cards with no annual fees, which is very useful during emergencies, such as buying for big household items, such as appliances.   But, don’t you know that banks charge higher interest for loans while they pay so little percent in interest for our saving accounts?

Think about it. Perhaps, banks thrive because of this scheme. Can you imagine how they make a big profit margin if they charge 12% loan interest, but they only pay a fraction of a percent in our savings account?

Or you might be thinking that paying the minimum amount due for your credit card will give you a better bargain. Think again.

If you plan to get a bank loan or is currently paying your monthly amortization, here are some of the things you should know before deciding on financing your next project.



  1. There are banks in every corner, making it easier to select the best credit offer;
  2. You can choose the most affordable repayment terms according to your monthly budget;
  3. If you have a credit line, you can get a loan without the hassle of documentation.


  1. Most banks require loan borrowers to provide collateral for their loans. In case of default, the bank will get the collateral and dispose of the property to cover for the unpaid portion of the loan;
  2. Delinquent payor will have a negative credit standing, and obtaining a bank loan in the future is difficult;
  3. Banks are strict when approving loan applications. Aside from the submission of loan documents, they also investigate your credit history;
  4. Bank loans have higher interest rates and fees, especially for long-term obligations.

Related Post:  The Benefits of Online Bill Payment

Final Thoughts

When you get a loan, you pay for the privilege in the form of interest and fees. And the costs can turn out to be higher than you expect.

If you miss paying the amortization, the bank will charge you for the late payment fees, and worst, if you are in default, your property will be taken over by the bank, and you will have a negative credit rating.

If you have the means, self-financing is the most practical alternative. Besides getting rid of the high interest and fees, you can sleep soundly at night knowing that you don’t have to think of some bank obligations.

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  1. Thank you for the post. Im actually in the process if applying for a bank loan for housing. We will go through with it, but it is nice to be aware of the risks involved!

  2. I wish I'm liquid enough to not need a loan for my condo, but there are some loans that are "necessary" I think. But as much as I can, I try not to have credit. I don't have a credit card, actually.

    Ultimately, if you're not like my dad who's liquid enough to purchase things (LOL) you have to weigh things well. Cus you're right, the interest rate for bank loans are quite high.

  3. Of course there are advantages and disadvantages of getting a loan. I think more times it is a disadvantage and people should simplify their life and really think about what we need. Marketing experts are excellent at conviencing people that "things" will make them happy. However, in reality they really don't. On top of that, when we get loans to buy them, it just creats more stress for us.

  4. Well I definitely think getting a bank loan especially from a credit union is always a better option than going to an independent loan organization or worse using credit. I have been personally credit card free for 6 years and Love the freedom. But when you need a big expense beyond your cash flow, your own bank seems the best bet to start first

  5. This is a helpful post about bank loans for people who have questions. I only deal with bank loans for cars and houses. Otherwise, we save the money or we wait. Thank you for sharing.

  6. These are great tips! It is always best to finance one's self. But if our own funds is not enough, then a bank loan is a good option. With the pros and cons to weigh out, of course.

  7. These are great tips! It is always best to finance one's self. But if our own funds is not enough, then a bank loan is a good option. With the pros and cons to weigh out, of course.

  8. I have been thinking of a car loan but i hate the idea of approaching banks to finance the same for i will end up paying way more

  9. In today's time we need to be very smart with spending. Bank loan or any loan should be considered for an emergency expenses only. Thank you for this post.

  10. I never considered not getting one. So interesting!!

  11. very useful post. I always try not to take loan if I can

  12. this is really informative & helpful for those in need for bank loans during this pandemic time. cheers, siennylovesdrawing

  13. A wonderful introduction on getting a bank loan. Very informative. I love how to touch based on the positives and negatives.

  14. Nkem says:

    Thank you for sharing this important information!

  15. I've never considered getting a loan for these same reasons, I would rather save than getting a loan and paying with interest.

  16. If at all possible, I think that is always best to not take out any extra credit

  17. Thank you for sharing these great tips! Very helpful 🙂

  18. Banks are a necessary evil. We have to turn to them from time to time, eve though we know the interest charged can be quite high, especially on credit cards.

  19. This is really helpful information for anyone that is seriously considering getting a bank loan.

  20. A bank loan is always advantageous provided that you have the means to pay the monthly amortization.

  21. I am so afraid of getting a bank loan, to be honest! Banks are the worst kind of vultures available. They take so much and give away so little!

  22. Getting loans from banks or any other financing companies it is given that you have to pay for the interest so you have to make sure that you can settle on time so it won't affect our credit standing. However, all were really affected when pandemic hits us. So I guess if you really doesn't need to get a loan. It is still better to save and have your own cash.

  23. There are always pros and cons when loaning from a bank. Thanks for sharing this informative post with us and will keep those helpful points in mind.

  24. I personally have only ever taken a loan for a house and university, both of which I'm paying off. The rest, I just save for or keep extra cash for.

  25. I didn't realize bank loans had a higher interest rate. I thought the opposite. Good to know!

  26. This is a brilliant post that is full of information that is useful to weigh up all the pros and cons of when to take or when not to take a loan x

  27. Great info and tips! Well, bank loans tend to be higher in interest but still good for the long term. Thank you!

  28. I have availed bank loans several times. Can't help when funds are not available.

  29. It's so important to know the pros and cons before accepting something like a bank loan! Thank you so much for sharing this with us so we can make informed choices 🙂

  30. This is wonderful Advice! You had a lot of useful suggestions and tips that I had not thought of!

  31. I had to take out a bank loan once and I was so glad when I paid it off. Thanks for educating all of us on the pros and cons of getting one.

  32. I think if you can pay in CASH it's better to do so, but there are good deals too with banks, that allow you to make fruitful expenses without losing so much money, all at once.

  33. Helpful and simple way of understanding the advantages and disadvantages of taking bank loans. Thank you very much for sharing this with us, I really appreciate it.

  34. Anna says:

    I try to avoid borrowing money whenever I can – I prefer to be happy with what I have and pay cash if I need something. It annoys me that, like you said, interest can be so high when banks give us such tiny interest rates on our savings accounts!

  35. I'd rather not. I like to be free from the interest and I'd like to sleep and wake up in the morning without worrying my loans.

  36. I've always been afraid to take a bank loan, but it never hurts to learn the pros and cons, thanks for the tips

  37. There is a loan for everything and most of us salaried people have to take out loans for buying a house, a vehicle etc

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