Introduction to 4 common myths about personal loans: A personal loan is a savior when handling your wedding expenses, house repairing, or other significant expenses. It is a kind of a credit tool, which is quite helpful. It is often availed at an interest rate lower than purchasing through credit cards.
The application process is hassle-free and speedily disbursed. It has fixed rates of interest, and you do not have to offer the security of an asset. Because this is an unsecured loan, personal loans do not involve much documentation.
Before applying for a personal loan, know about these common four myths that you must not follow:
4 Common Myths About Personal Loans
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- Only banks offer personal loans
The most common myth about a personal loan is that only a bank offers one. Banks are a component of the financial institutions providing loans, but other institutions like non-banking financial companies (NBFCs). Apart from banks, NBFCs also offer personal loans.
If a bank rejects your loan application, you can go to NBFCs and other digital loan providers. Many NBFCs and digital lenders offer personal loans with further flexibility and less rigid approval norms. NBFCs provide customized and varied loan offerings, with chances of high approval.
- Can be availed for personal reasons only
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A personal loan is availed without any collateral. Hence, in case of a medical emergency, personal loans can offer you a quick provision of cash. Such a personal loan for a medical emergency is known as an emergency loan.
To avail of a personal loan for a medical emergency, you must have the following eligibility:
- You ought to be a resident Indian citizen
- You must be between the age bracket of 21 and 60 years.
- The Loan approval process is time-consuming
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A digital personal loan application can be submitted in minutes with advanced technology. The concerned bank’s doorstep services can also be availed of for the loan processing. These days you can complete the loan application by digitally uploading scanned copies of your documents. It makes the process quick and safe.
In case of a personal loan for a medical emergency, the process is also speedy and hassle-free. Some lenders can even credit the loan amount the next day following your signature on the loan application.
- Salaried people can only apply for personal loans
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This idea that only salaried people can take personal loans is a complete myth. Self-employed individuals and business owners can also apply for personal loans. However, since a salaried professional has a steady income flow, this myth has been doing the rounds. For a lender, what matters is your borrowing capability and capacity to repay the loan properly.
Anyone with a consistent and guaranteed income flow can apply for a personal loan. The individual’s past credit and cash flow record are accurately evaluated before the loan sanction.
While these are the significant myths about personal loans, there are a few more.
- Personal loans are sanctioned for shorter tenures, but that does not mean that it does not have a pre-payment option. You can pay off the loan amount ahead of the loan term.
- Personal loans are usually applied for debt consolidation. You can refinance your debts by only paying a monthly installment with a fixed interest rate. Hence, personal loans do not add to your debt burden.
- It is a general misapprehension that only top-tier borrowers can avail of personal loans. Some lenders offer loans to people with average credit scores and fewer earnings.
- If you are already paying off an ongoing loan, you are still eligible for a personal loan. The belief that personal loans cannot be availed with an existing loan is wrong. You can also apply for a second personal loan while repaying the first.
To avail of a home or car loan is quite time-consuming and cumbersome. In comparison, getting a personal loan approved is a more straightforward process. To apply for a personal loan, you have to complete an online application and wait for approval.
Therefore, the process of application for a personal loan is very straightforward. You do not require assistance, but if you do, the customer service of a digital lender can help you out.
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