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Top 17 Myths About Personal Loan You Should Not Believe

What is a personal loan?

A Personal loan is repaid in monthly installments. A lot of information prevails in the market that has no justification or correct reasons. Such information can be a myth, and it is believed by individuals. In the loan industry, a lot of myth is believed by the individuals in the case of a personal loan.

Myths About Personal Loan

Personal Loan
Personal Loan

A personal loan is a very common and most popular form of debt, and there is various misinformation about it. To all the misconceptions and doubts, you need to have clarity. A personal loan is the most useful tool for the quick and easy to fund in your account easily.

When you believe in the myth, you believe something that is not right. Many individuals don’t go for a personal loan just because of some myth that is not true. Every information that you take from the market or any source should be verified before you take it seriously.

So that you do not believe anything wrong with a personal loan, we are here to discuss some of the most common myths. It will give you the best of your knowledge and you can easily clear your doubts.

Common Myths About Personal Loans

The term “personal loan” is sometimes misunderstood. Many people, particularly first-time borrowers, are affected. Followings are some common myths about personal Loans:

  • Low credit score leads to loan rejection
  • Personal loans have a high rate of interest
  • Personal loans can only be availed from banks
  • Personal loans cannot be availed if you already have an existing loan
  • Only salaried individuals can apply for personal loans
  • Personal Loans Are Only for People Who Are Employed
  • It’s Difficult to Apply for a Personal Loan
  • Personal loans do not have a prepayment option
  • Processing time is so long
  • Getting Approved for a Personal Loan Takes a Long Time
  • A Personal Loan Can Only Be Used for Personal Expenses
  • To Get a Personal Loan, You Must Have a Stellar Credit Score
  • Personal Loans Require Collateral
  • Personal Loans Trap a Person in Debt for a Long Time
  • It Doesn’t Matter Where You Take Out Your Loan
  • The credit profile is not the same as earlier
  • Do not apply for more than what you actually need

You can get a personal loan only from banks

The loan industry has seen a lot of advancement and new tools. It is an utter myth that you get a personal loan only from the banks. This is not the case right now.

Apart from traditional banks, you will find a lot of good and authentic options to borrow. There are some very well-known Fintech organizations, NBFC, and other online platforms for borrowing. They are equally good and come up with instant personal loan options for the customer.

You cannot limit yourself to the traditional banks that do not have much to offer you. For best offers, instant approval, and other features, you should try out the other options.

Having a bad credit score can get your loan rejected

The loan industry has not given all the powers to just one criterion. It is of course true that a credit score is the most important thing, but it is not everything.

If you do not have a credit score your process gets difficult and delayed, but you can still get a loan. There are various other ways by which you can get a loan. You can try out options like loan guarantor, secured loan, a high income, or any other negotiation to get a loan.

Having a bad credit score does not mean you cannot get a loan, as other factors are working too. You can always improve your score, but with a good Income or a property, you can get easy approval.

You can get a personal loan only with a salary

A personal loan applies to anyone that earns. The mode of earning is not at all important to get a personal loan. A self-employed and salaried employee is equally eligible to get a loan. Having an employer is not a necessity to get an instant personal loan online.

If you are an entrepreneur and you have a business, you can easily get a loan, if your income is a good one. The main criteria of offering a loan are stability and income. If you have a good income from your business, you are an asset to the loan provider. So, be it a self-employed or a salaried employee you can get a loan with an income.

The processing time of a personal loan is very long

The personal loan is the only loan that is the fastest one. The advancement that has happened in the personal loan can get you the fund in few hours. Do you have any other loan that gets you in 3-5 hours of disbursement? This is a myth, and should not be believed.

A personal loan is the fastest approval loan as you get the approval very quickly. It is the best one to meet all your urgent and emergency needs because it gives you instant funds in your account. You can easily manage all your expenses quickly without waiting for long weeks.

The interest rate is high

A personal loan is one of the most affordable loans. That is why it has been so popular and often used for debt consolidation. If you have all your eligibility criteria in place and have enough comparisons made, you can get a good rate of interest.

It is on you that how well have you researched the loan providers and got yourself the best deal. Compared to home and auto loans, a personal loan is not at all an expensive form of a loan. You can easily manage the low EMI with a low rate of interest and other charges.

Documents Required for Personal Loan

Requirements Salaried Individuals Self Employed
Proof of Identity Passport, Voter’s ID, Driving License or PAN Card Passport, Voter’s ID, Driving License or PAN Card
Proof of Residence Passport or utility bills Passport or utility bills
Proof of Income Bank statement of salary account for the past two years Audited financial statement of the past two years

Wrapping up

A personal loan is very useful and an important part of daily life. It has been a support for all the mishappenings and undesirable situations. Get an instant personal loan online from the comfort of your home.

Also read: How To Make Your Business More Resilient

The founder and CEO of ThriveVerge, Thrive, and The Verge Revolution. In 2016, he launched Thriveverge, a leading behavior change technology, news, media, entertainment, and daily news company with the mission of changing the way we work and live by ending the collective delusion that burnout is the price we must pay for success.

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