Personal Loan Myths – Busted!

Personal loans are loans that take care of any personal need such as funding a wedding, college tuition or for paying off existing debts. They are easy to apply for and their quick disbursement makes the entire process extremely simple and hassle-free.

Despite the popularity and known benefits of instant personal loans, some myths about personal loans still prevail in our day-to-day lives. This can mislead people into thinking that personal loans add more stress than resolving the existing problems.

These are some of the misconceptions regarding personal loans and why they are incorrect:

  1. Personal Loans are Expensive

It is true that personal loans are usually available at 12-14% interest rates, which puts most people off. However, the interest rates on personal loans are much lower than interest rates on credit cards. Therefore, in the long run, it is wiser to apply for a personal loan.

2) The Application Process is Complicated

This is another common myth surrounding personal loans. Personal loans require only basic documentation and, once approved, the funds reflect in your account in 24-48 hours. This is much faster as compared to other loans.

3) Only Salaried Employees are Eligible to Apply for a Personal Loan

It is not true that you must show several salary slips, a company verification, etc. to procure a personal loan. Self-employed people and businessmen can both apply for personal loans and enjoy the same benefits as salaried employees.

4) Poor Credit Scores are Equal to Ineligibility

Having a poor credit rating is not recommended, but having mentioned that, you are not incompletely ineligible if your credit history is not at its best. Some financial institutions still grant personal loans even when ones credit history is not up to the mark.

5) Personal Loans are a Financial Burden

A single personal loan can cover many small, existing debts. Additionally, if you take a personal loan for the said purpose, you will only be tackling a single interest rate instead of multiple interest rates. Personal loans do indeed significantly reduce one’s financial burden.

6) Paying Off Credit Card Debts with Personal Loans Is Not Beneficial

It is wise to pay off the accumulated credit card debt with a personal loan which comes at a much lower interest rate when compared to a credit card’s interest rate.

Now that you know of some of the myths surrounding personal loans, we hope that you will have more clarity when applying for a personal loan. It is also suggested to always remember that when it comes to a situation that requires immediate cash, a personal loan is the best option.