Common myths about personal loans

Common myths about personal loans

Personal loans are one of the most popular sources of quick cash. One of the hassle-free ways to meet your cash requirements almost instantly would be to avail unsecured loans. Despite the rise in demand for it, there are a few people who are still scared because of some misconceptions they have heard and haven’t bothered to confirm. The point is to be informed about the actual picture so that you can make the right choice and not hesitate at the time of application.

Here are some of the personal loan myths demystified:

– Can I avail personal loans if I already have an existing loan or loans?

The only thing that lending institutions look at is your ability to repay the loan you are about to take. However, if you happen to have too many loans or credit card bills, that doesn’t mean you can’t take advantage of a personal loan. There is an option called debt consolidation where you can combine your debt from different institutions into one personal loan. This will definitely give you better control over your debt burden as you will now be paying one installment instead of several.

– Why are interest rates unreasonable?

The fact is that interest rates on unsecured loans are slightly higher compared to conventional loans like secured loans. The reason being that these are unsecured loans that do not require collateral or security, it is only natural for banks to guarantee that their money will be paid. If you want to get the best interest rate available, then you will come across various seasonal offers that are definitely worth taking.

– Can I apply more than necessary?

It’s generally not a good idea to apply for any type of loan beyond your ability to repay. You may come across several agencies that claim to give you the maximum loan amount (which usually exceeds your repayment capacity) so that you can enjoy the so-called maximum benefits. Don’t be fooled by this because lending institutions never approve when it exceeds your payout limit. Always remember, borrow only what you need so that a) you save on unnecessary installments and b) you can easily take advantage of other loans when needed at a later stage.

– Can I apply for a personal loan in several institutions?

Although it is not against the rules to apply for a loan in multiple institutions, but if even one bank is aware of your application in different institutions, it will only further delay your process of getting a loan immediately and increase your chances of rejection. So it’s safe to not apply to multiple institutions to have the best chance of getting your loan approved.

– Is my credit score a deciding factor in my loan approval?

Your credit score is one of the important factors in the approval or rejection of your loan, but it is not the ONLY factor that decides your application. Other factors such as income, company category and overall profile score also play an equally important role.

There will be several other questions that will come to mind, which is why you need to approach the right people when it comes to your personal loan application.

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