A personal loan with its multi-purpose and collateral-free nature is one of the best short-term financial solutions available in the market. A personal loan offers innumerable features such as instant approval, simple eligibility criteria, quick disbursal and flexible repayment tenors. However, with so many features that seem to be too good to be true, you may also encounter unverified and baseless theories that may discourage you from taking a personal loan.
Common Myths of Personal Loan
Read on to know about 7 common myths surrounding a personal loan and the truth behind them to ensure that you aren’t deterred from applying for this loan for the wrong reasons.
Low Credit Scores Disqualify You for a Personal Loan
Many assume that a low credit score will lead to automatic rejection of your application. While your credit score is a crucial eligibility criterion, other criterion like your income and employment indicate your creditworthiness to the lender, which may help you with loan approval. You can also opt for a personal loan with a cosigner or co-borrower if you have a low credit score and enjoy approval if your co-applicant’s credit score is high.
Personal Loans are Only Issued by Banks
Though banks form the majority of financial institutions in the country, many renowned Non-Banking Financial Companies or NBFCs also provide personal loans. Moreover, these NBFCs have more flexible eligibility criteria.
Personal Loans have a Longer Processing time
Another common misconception is that personal loan applications take a lot of time to process. This may have been the case a few years ago, but now most lenders disburse the loan sanction in 24 to 48 hours. Also, since a personal loan is a collateral-free loan, it does not require the submission of a bundle of documents, again minimizing processing time.
Self-employed Individuals cannot Apply for a Personal Loan
This is another half-baked myth about the evaluation of a personal loan application. Indeed, a salaried individual may easily qualify for a personal loan as the salary is a criteria that lenders look into to ensure timely repayment. However, even self-employed individuals can apply for a personal loan, and this approval is based on the borrower’s credit history and financial viability of their venture.
Personal loan Interest Rates are Exorbitant
Many believe that personal loan interest rates are very high. However, this is false as personal loan interest rates depend on your credit score, repayment behavior and income. If you have a high income and a good CIBIL score, then you are likely to be offered nominal personal loan interest rates.
You cannot Prepay a Personal Loan
This misguided assumption stems from the fact that a personal loan has short repayment tenors. However, this is not true, and you can close the loan before its tenor by paying a foreclosure fee for the early repayment of the loan.
The end-use of the Personal Loan Amount is Restricted
There are no restrictions on the end-use of a personal loan, and you can use this loan amount to invest, renovate your home, finance your wedding, fund a medical treatment, consolidate your debts or boost the working capital of your business. The fact that you can use the funds from a personal loan for any purpose you see fit is one of the reasons behind its popularity.
Now that we have separated the myths from facts, consider a Personal Loan to meet your financial needs – from consolidating your debt to financing your child’s higher education.
A Personal Loan not only offers you a high loan amount of up to Rs.25 lakh, but also facilitates easy repayment of the loan via a flexible repayment tenor of up to 60 months. Additionally, you can avail the Flexi Loan facility, where you can borrow from the sanction in parts, multiple times, without submitting multiple application forms. To further reduce your loan repayment burden, the interest is only applicable to the borrowed amount and not the sanction.
You can get online approval on your personal loan application in 5 minutes and disburses the total loan amount to your bank account in as quickly as 24 hours!
So, if you have a significant expense around the corner, use the personal loan calculator to calculate the repayment tenor best suited for you, and check your pre-approved offer from your loan providers to get instant financing.