Personal loans are the easiest and fastest way to deal with any financial problems as they offer many benefits such as instant online approval, flexibility, no restrictions on final use, an immediate withdrawal, etc. Unfortunately, with so many benefits comes several half-baked theories that tend to mislead people about personal loans and force them to look for more expensive ways to deal with the financial crisis.
Myth1. Only banks offer personal loans
Many people tend to believe that banks are the only financial institutions that offer personal loans. Yes, all the banks offer this type of private loan but there are many NBFCs as well as digital lenders that always offer personal loans. If the bank rejects your loan application, you can contact these NBFCs and digital lenders for their Personal Loan Eligibility options are less flexible than banks.
Myth2. Low credit score leads to loan disbursements
Credit points are one of the most important factors considered in determining your creditworthiness. However, credit scores do not completely affect the chances of your loan approval. 750 or more credit points are considered healthy for lenders but if you have a low credit rating (less than 750) other factors such as your salary, employer, etc. may keep your loan application. In such a case, the interest rate will be higher, but you will be more likely to get a personal loan.
Myth3. Only earners can get a personal loan
It is a common misconception that only paid professionals with a steady income can get personal loans. Self-employed people/professionals such as entrepreneurs, CA, doctors, etc. They can also apply for a personal loan and lenders will check their credit score and ITR before approving the loan. Some banks offer private loans to pensioners.
Myth4. Processing time is long
Many believe that the processing of personal loans is time-consuming and has many rules involved. This is not true. These days when digital banks are digitized, you can easily apply for a personal loan online and you can process your loan application by submitting small documents. Also, you can get instant approval online and the amount will be credited to your account within 3-5 working days.
Myth5. Personal Loans carry high-interest rates
Many people think that interest rates are higher. But you know you can get a personal loan with a low-interest rate of 10.99%. Yes, it is also true depending on your debt, your age, your payment history, employer, etc. Also, personal loan interest rates are very low compared to credit card interest rates starting from 30%. Therefore, it is always possible for a person to borrow money instead of having a credit card. City Union Bank Personal Loan Eligibility criteria are easy enough to get a personal loan.
Myth6. There is no advance payment option
Because of the short duration of personal loans that often vary from 12 to 60 months, many people believe that there is no prepayment option offered on personal loans. However, you can pay off the loan before the expiration date. Some banks have a lockout period of 6 to 12 EMIs and after paying these EMIs, you can terminate the loan at any time before the end of your stay.
Myth7. You can apply for individual loans from various lenders at a time
Yes, you can apply for a personal loan from various lenders at the same time but it is not advisable. Every time you apply for a personal loan, it is registered with the credit bureau as a thorough investigation and reflected in your credit report. If any lender checks your credit report, he or she will be able to see this investigation and will consider you as hungry for the loan and therefore may not approve your loan application. Therefore, you should use only one lender at a time.
Conclusion
If any of the above legends ever stopped you from taking out a personal loan, it's time now. Just remember, don't borrow more than you can afford to pay off as this can lead to failure of monthly payments in the future.
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