Most of us know that personal loan interest rates are higher than other products. And many people believe that you need to put down collateral against a personal loan. However, many more myths are associated with these loans, which are not true!
Let us take you through five common misconceptions about personal loans and how we can dispel them once-for-all:
- Personal loans have an extended repayment tenure.
It is a common belief that personal loans have an extended repayment tenure. But, this is not true at all. A personal loan is generally taken to meet your individual needs; hence, it has a fixed term of up to 7 years. The interest rate on a personal loan can vary depending upon the lender and other factors such as your credit history, income, etc.
The monthly instalment for these loans is also fixed for the entire repayment period. The interest rates for personal loans are higher than that of other products.
However, interest rates vary between banks and can even differ within the same bank. The personal loan interest rate depends on:
a. Your credit history and score
b. The amount you wish to borrow
c. When choosing a product, if you are looking for a low-interest rate loan, your best bet will probably be a personal loan over other types of loans. That said, there are plenty of other factors to consider when deciding whether or not this type of loan is right for you. - You need to put down collateral against a personal loan.
One of the biggest myths about personal loans is that you need to put down collateral. This is a myth, as one can get a personal loan without collateral or a top-notch credit score.
Personal loans are unsecured, meaning that banks or other lending institutions do not require any kind of physical possession from their borrowers. The lender would instead base their decision on your income, employment history and other factors. Lenders may also consider approval for a personal loan if you have an outstanding credit score with a healthy bank account or no credit score.
In addition, no co-borrowers are required when getting a personal loan either! You don’t need anyone else’s help when applying for one because they will only check your creditworthiness before deciding whether or not they want to lend money out for whatever purpose it may be used. - Applying for a loan is tedious and time-consuming.
Applying for a personal loan is not tedious and time-consuming at all. If you’re considering getting a loan but are intimidated by the thought of using one in person, don’t worry! The process is smooth and fast. You can apply online from anywhere at any time—you don’t need to visit your local branch.
In fact, most lenders will give you an application form that asks for information about yourself, such as how much money you want to borrow and what it will be used for (e.g., paying off debt or starting up your own business). Once they receive this information, they’ll let you know whether or not they can help. If yes, simply sign onto their website again and fill out the rest of the forms, including details like proof of income/employment history and other personal information such as contact details. - Multiple documents are needed to avail of a personal loan.
You need to provide your PAN card, address proof and a few other documents to avail of a personal loan. Applicants can submit the documents online and get approval for a loan within a day or two.
Many myths are associated with these loans, some of which are false and some partially true.
The common myths associated with personal loans are:
- The interest rates for personal loans are higher than that of other products.
- You need to put down collateral against a personal loan.
- Applying for a loan is tedious and time-consuming.
- Multiple documents are required to avail of a personal loan.
There are a lot of myths associated with personal loans, and the truth is that these loans are not as difficult to avail of as many people think. The main thing is that you know what kind of loan suits your needs best and then apply for one.
LoansJagat makes it simple to apply for a personal loan in Delhi or a debt consolidation loan to combine the existing loans. They have a simple online application which lets applicants get loan offers from top lenders to compare and choose.
