7 Myths About Personal Loans You Must Be Aware About

There are many doubts and misconceptions about personal loans that make people apprehensive about applying for them in the first place. Now, prospective debtors can be surer about many aspects of personal loan.

Even if one need a personal loan, there are many who do not apply just because they hear about the difficulties one has to go through to get an approval. However, most of them are myths or even if true, are not as hard to tackle if only one has some sound financial planning. There are some myths to be busted about Personal Loan Rejection upon which you can rely. Following are these myths:

Personal Loans Have Long Processing Time:

Many borrowers think that personal loans have a very tedious approval process and a lot of time has to be spent waiting. However, this is not true. If the documentation is correct, and if one has made an online application, then the loan could get approved in as less as 24 hours. Unsecured loans with no collateral take even less time. Lenders work very fast to understand the needs of the client and approve the loan.

Low Credit Score will Lead to Rejection:

It is true that a high credit score is one of the criteria for getting the loan approved but that does not automatically mean that a low score would lead to rejection. Factors like income and repayment plans on the part of the borrower shall be taken into account. One might also have to pay higher interest, but chances of outright rejection are low.

Only Banks can Give Personal Loans:

This is one of the biggest myths today. Banks of course provide personal loans, but there are many major NBFCs, who are helping people realize their dreams. They offer personal loans at attractive interest rates and in most cases are also more considerate, which means they would not reject a loan application outright on certain grounds as a bank would.

Interest Rates of Personal Loans are Higher:

There is a common misconception that personal loans have exorbitant amounts of interest but in reality, personal loan interests can be as low as 10.99% if one has a good credit score and a solid repayment plan in place. There are confusions about what is the personal loan interest rate in many cases. Lenders also settle interest rates on loans depending on the borrower’s credit score. In contrast, credit cards have interest rates as high and 18% to 25%.

A Second Loan would not be Granted in Case of an Existing Loan:

There is no rule that says that a borrower is not eligible for a personal loan if he already has another loan like a car or a home loan. The creditor will only judge the repayment capacity while deciding whether to approve your loan or not and if they see you have sufficient income to pay up your personal loan in spite of having another loan, your loan would be approved. In fact, in some cases the chances of getting approved are higher if the creditor sees that you are making timely payment on the other loan you have and that makes you a safe borrower to lend to.

No Prepayment Option:

Another myth is that since personal loans have short duration, one cannot make prepayments, but that is untrue. One could have to pay a pre-payment charge but there are options of making prepayment with almost all banks and NBFCs.

Online Applications are Tedious:

On the contrary, visiting a branch to apply for a loan is actually a more tedious task these days because of stages of Personal Loan approval involved. Today there are leading banks and NBFCs like Bajaj Finserv that have a very good online exposure and can help borrowers apply and get approved for personal loans through their online platforms.