7 Popular Myths About Personal Loan

Multiple Purpose Collateral Free Personal Loan

Personal loan is a multi-purpose loan as it assists in many purposes. This type of loan demands no collateral security and also helps in pulling you out of a financial crisis. You can get personal loan to meet the costs associated with medical emergencies, wedding expense, home renovation, travelling and education.

However, personal loan does contain its own rules and regulations. People have generated various misconception around it. Due to this they choose difficult paths without having a correct knowledge regarding personal loan.

These are the following myths which will make things clear and help you to choose a correct option.

Personal loan application has long process

he borrowers think that personal loan includes a very long process which contains verification of various documents. Therefore they tend to believe that the process requires a lot of time.

Although, as it is an unsecured loan the documentation is much easier. That is why online facilities have been provided to the borrowers to save their time. 

Only your attention is required when you submit the documents. Do not forget to look after KYC documents, employment ID card and salary slips of the previous months for lenders to check your eligibility. 

Low Credit Score Create Mishaps

If you have a low credit score do not hesitate to apply for another application. It is true that the credit score below than 750 can create bad impression over lenders. However, different banks have their own policies. Other banks will listen you.

You can still get a loan on the basis of your income and repayment eligibility. Meanwhile, the interest charged for the loan would be little higher for those borrowers who have a low credit score.

High Interest Rates on Personal Loan

Borrowers believe that the banks charge high interest on personal loan. But the fact is that the interest rates can go below than 10.99 percent. Moreover, it depends on a person’s credit score. If the credit score and repayment eligibility are strong the interest rates would be low.

You should study about it before taking a decision because personal loan has less interest rates than other borrowing options such as credit cards whose interest rates between 18 percent and 48 percent a year.

No Other Loan if already have existing loans

“You cannot get another loan if you have already taken too many loans.” It is the biggest misconception of borrowers. Lenders approve your loan application after verifying your Net Disposable Income. NDI tells the amount of money that a household has after income taxes and it gives a vague idea to the lenders.

Moreover, they do judge on the repayment eligibility and the strong credit score. Therefore, you can put another loan application without any tension.

Self Employed Borrowers are not Eligible

You need to know this that business men, NRIs and self-employed men are all eligible to take a loan. It is a myth that only salaried employees will get it. Moreover, monthly salary slips are not that sufficient. If you have the eligibility of repayment you can get it easily.

Make sure you are taking the loans from multiple financial institution as it can slow down the process.

Personal Loan for personal purpose

Do not let the name deceive you. Personal loans are not only for personal purposes but also you can invest the money taken by the bank in your startups and business. The bank is not going to cross checking you on how you are using their money. But make sure you repay it on time.

Personal loans can only be taken by the Banks

If you think you can only get the demanded money from banks then there is a vital need to know about Non-Banking Financial Companies which are eager to solve the problems of those who are in dire need of money.

NDFC is a financial institution which has different policies than the banks. It does not have a full banking license. Therefore, you can also take loans from such institutions.

Hence, these are the misconceptions which lead you to change your mind. Hope these points will transform your thinking and you will be able to comprehend facts in a better way.

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