A personal loan is a savior when you need short term liquidity, don’t you agree? The hassle free application process and quicker disbursement has made personal loans the choice and millions. Despite its popularity, certain myths about personal loans make it look like a debt trap as people don’t bother to confirm these misconceptions. Let’s clarify them for you so you know the facts and you know exactly what you’re getting into when you apply for a personal loan.
- Myth # 1: Personal loans are expensive
This is one of the most common reasons why people keep away from Personal Loans. Usually available at 12-14% interest rates they are way lower than credit card interest rates making them the best option when you need immediate cash flow. An added advantage is that personal loans are unsecured loans and are approved without any collateral. Looks can be deceiving!
- Myth # 2: Only Salaried employees are eligible
The misconception that you need an offer letter, salary slips and a company ID to get a personal loan is just a myth. Even self-employed, businessmen and NRIs can also get personal loans. . However, make sure you don’t apply to multiple institutions as it might make the process slower and the odds of your application getting rejected is higher. That’s good news, isn’t it?
- Myth # 3: Tedious approval process
This usually makes people mentally “sign off” a personal loan. But a personal loan is usually approved within 24 – 48 hours and requires minimum documentation. The overall process of applying for a personal loan and the turnaround time is faster compared to other loans. A dream come true?
- Myth #4: Apply for more than what’s required
Borrowing more than what you require even if you’re eligible is a big mistake. The misconception that you need to apply for more to pay off the first instalment and the processing fees will just create an additional burden and a poor credit score if you don’t repay on time. The truth is lenders have a pre-determined amount and repayment tenure based on your eligibility. So apply for what you require and nothing more. BUSTED!
- Myth #5: You can’t apply for a personal loan if you have existing loans.
There is no hard and fast rule that you cannot apply for a personal loan if you have existing loans. However, if you have too many loans a lending institution might look at your ability to repay the debts and this might affect your eligibility. To control the burden of multiple loans, you can use the debt consolidation facility through which you combine multiple debts into one. This will ensure better control and you just have to pay one instalment instead of multiple EMIs. One debt better than many.
Myths are not facts, they are not supported by any evidence. People tend to believe in them as they hear it often from people who they think are opinion makers. Don’t fall prey to myths without researching the facts. Now that we’ve busted these myths about Personal Loans, go ahead and check your eligibility from the offers we have in store for you!