In recent times, there has been a significant rise in consumers opting for personal loans, owing to the factors of ease and benefit. Also, with the option of converting purchases into equated monthly installments (EMIs), borrowers are able to manage their personal budgeting in more efficient ways. Fast cash loans can be of great help to households for meeting shortages faced while buying a house or car, or in cases of education and medical emergencies.
However, despite the popularity of personal loans, there are certain myths associated with them that make them appear dubious and risky, akin to bad credit loans. A lack of awareness plays a vital role in the creation of such myths in the minds of customers, and it is crucial to know in depth about the facts related to personal loans. In order to help you do the same, we have created a comprehensive guide to debunk personal loan myths, below:
1. Myth: Only salaried individuals are eligible for personal loans.
Fact: There are provisions for both salaried and non-salaried/self-employed individuals.
A widespread myth among the masses, as most people seem to nurture the idea that a salary slip and company ID are prerequisites for availing personal loans. Many banks and Non Banking Financial Companies (NBFCs) provide loans to self-employed individuals, provided that they meet certain criteria, such as filed ITR, Gross Annual Receipts, and satisfactory credit history. Businessmen and NRIs can also avail these loans. Make sure that you do not apply for a loan at multiple institutions at the same time, as it will take longer and chances are that your application might get rejected.
2. Myth: Personal loans cannot be availed with a low credit score.
Fact: You can avail a personal loan, even if your credit score is not good.
A low credit score cannot hinder you from availing personal loans from banks or other financial institutions. However, a bad credit score heavily impacts the interest rate at which the loan is processed, along with the amount that your lender is willing to grant you. This is mainly because having a low credit score creates an image of risky investment. While there are several ways to improve your credit score, you can also apply for online payday loans for hassle-free and quick loan transactions.
3. Myth: The loan application process is lengthy and complicated.
Fact: It is not lengthy, and quite straightforward.
Another misconception that holds currency in the minds of people is that the approval process is cumbersome and time-consuming. On the contrary, the approval process is fairly quick and requires minimal documentation in comparison with other loans. Also, in today’s digital world, you can skip long queues by applying for fast cash loans online via loan application portals. The process is rather simple and takes a few days to be disbursed.
4. Myth: Personal loans charge an unfair amount of interest rates.
Fact: Personal loans demand fairly reasonable interest rates.
Personal loans are perceived as expensive and positing unfair interest charges to customers. Usually, personal loans are available with interest rates starting as low as 10.75%, which is a reasonable amount when compared to other forms of credit. Also, as personal loans are unsecured loans, one does not have to set up anything as collateral.
5. Myth: You cannot apply for a personal loan if you already have an acquired existing loan.
Fact: You can; it is yet another misconception.
There is no official rule in place that will hinder you from applying for a personal loan if you have an existing one. Those unable to pay off their previous loans can opt for a personal loan balance transfer from a high to low-interest loan. Facilities, such as consolidate debt are also provided, which helps you combine multiple debts into one. This not only ensures finer control over a loan but also allows you to pay off in one installment, instead of multiple EMIs.
Therefore, myths are just widely believed falsities that do not hold genuine credibility. No matter what financial decisions you choose to embark upon, carry out in-depth research before falling prey to misleading information, that can be detrimental for you in the long run.