Personal Loan Myths

Personal loans are a type of borrowing that offers a lower interest rate than a credit card and have been used to finance practically any purchase. These loans include fixed monthly payments and a speedy approval process. Personal loans are also advantageous because they are unsecured, which means that no collateral is necessary to acquire the loan. The personal loan interest rate are wide in nature and vary according to the borrower’s eligibility criteria and financial factors. 

Here are some of the most common personal loan misconceptions.

A low credit score will act as an obstacle in obtaining a personal loan

Credit score has its own importance while seeking a personal loan. On the other hand, your credit score does not have a significant influence on your loan approval chances. A credit score of 750 or higher is considered great; but, if your credit score is less (less than 750), other factors such as your wage, profession, and so on can protect your loan request. The interest rate may be higher than normal, but you still can seek a personal loan. 

Personal loans are only available through banks

People think that a stable source of income is important for personal loan application. This is just another myth about how personal loan applications are evaluated. Salaried workers have an easier time obtaining a loan approved since they have a steady stream of income and can provide proof of that using a paystub generator. Self-employed people, on the other hand, can apply for personal loans, with the loan balance determined by the borrower’s credit history.

One of the most widespread misconceptions about personal loans is that they can only be obtained from banks. This is entirely false; there was a time a few years ago when personal loans were limited to banks only, but that is no longer the case.

However, with the help of NBFCs, personal loans are more accessible. Furthermore, requesting for a personal loan from a non-banking financial institution (NBFC) is a preferable alternative because most of them provide immediate loan approvals, swift disbursals, little documentation, and flexible qualifying conditions.

Personal loans have higher rates

Another prevalent assumption is that personal loans are prohibitively expensive. You can apply for a personal loan with the help of a bank, NBFC or others. Most personal loan providers will try to entice you to borrow by offering cheap interest rates and other favorable terms.

Existing loans also do not let you apply for another personal loan

Another common Personal Loan misunderstanding is that you cannot apply for a Personal Loan if you currently owe money. There should be no issues as long as you pay your existing loan EMIs on schedule. The loan application will be approved or denied based on your ability to repay, not the amount of outstanding loans.

Personal loans are only for salaried individuals

People think that a stable source of income is important for personal loan application. This is just another myth about how personal loan applications are evaluated. Salaried workers have an easier time obtaining a loan approved since they have a steady stream of income. Self-employed people, on the other hand, can apply for personal loans, with the loan balance determined by the borrower’s credit history. 

The Bottom Line

Applying for a personal loan is easy if you have a strong repayment history and a stable financial foothold. 

The Personal Loan application process is simple and straightforward. You can now apply for an instant Personal Loan online, making the procedure much easier. Furthermore, loans are handled almost rapidly and sums are dispersed within a few hours, with minimal verification. If you still have questions about Personal Loans, you can always contact your bank for clarification.