Personal loans work as an excellent means for people to meet their immediate financial expenses. Unlike as in case of auto loans, home loans etc., the amount availed through personal loans can be put to any use, depending upon the borrower’s priorities. Another factor that sets them apart is their unsecured nature. It implies that you don’t need to provide any collateral to the lender, in order to avail of personal loans.
Unfortunately, along with many benefits of personal loans also come half-baked theories which have misled people time and again, over the years. Let’s bust some such commonly known myths associated with personal loans.
Personal Loans Feature: Highest interest rate
Many people think that personal loans have the highest interest rate amongst all loan products. This is far from the truth. Lenders normally decide the interest rate charged on a personal loan depending upon the borrower’s credit score and repayment capacity.
People with low repayment capacity need to pay high interest rates to avail of such loans. On the other hand, borrowers with a good repayment track record and healthy credit score, can avail personal loans at very attractive rates.
You can take a Personal loan only from a Bank
Another prominent myth related to personal loans is that they can be only taken from banks. While banks constitute the majority of financial establishments that extend personal loans, there are a good number of NBFCs (Nonbanking Financial Companies) too that offer personal loans to interested people these days.
In many cases where people apply for a personal loans online, with banks’ websites, but their application is rejected, digital lenders and NBFCs go ahead and offer credit to such borrowers.
A personal loan can only be taken by a salaried person
A very commonly noticed misconception, this one has existed for a pretty long time. People have a mistaken belief that only salaried individuals, having a steady monthly income, can take a personal loan.
However, in reality, self-employed professionals, individuals such as doctors, CAs, businessmen, etc. are also eligible for this product, as long as they meet the eligibility criteria set by the lending establishment. In fact, some banking establishments offer personal loans to even pensioners.
Personal loans take a long time to process
Absolutely wrong! This is another myth that needs to be busted. Many believe that personal loans take a lot of time to process and involve plenty of formalities. In reality, it’s actually the opposite. Nowadays, with all lenders having been digitized, you can apply for a personal loan online within a matter of a few minutes.
The loan application can also get processed by uploading the scanned copies of your documents. Not just that, instant approvals can be obtained online and the loan amount can sometimes get credited the same day, or maximum within 48 hours.
You cannot avail a personal loan if you have an already running loan
Many prospective personal loan applicants think that they are ineligible for a personal loan simply on the grounds that they have an already running loan. There is no truth to this.
In fact, the same criteria which were used for sanctioning of your first loan are likely to be used for the fresh personal loan application too. Financial institutions extend personal loans based on the repayment capacity of borrowers, after factoring in their existing EMI payments.
If you’re keen on taking personal loans and are looking for attractive interest rates, GoSahi is the ideal platform where you can compare and choose from the best personal loan offers.
Also, Read This: Key Points to Remember While Applying for a Personal Loan