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De-bunking Common Personal Loan Myths

By Chanel Rick - Jun 24,2022
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There’s no denying it – 

saving up enough money for emergency funds isn’t easy

Regardless of what ads and articles suggest, many people still struggle to save for rainy days. Don’t be ashamed! While budgeting and expense tracking are healthy practices, certain constraints might hinder you. Though, unpredictable monetary crunches are seldom understanding or lenient. 

Each year, new financial obligations will threaten the delicate balance of your budget. With every milestone in our life, new expenses will be generated, like further studies, real estate investments, your wedding, child-rearing, etc. 

Personal Loans: The Need & It’s Benefits 

The internal conflict of potential personal loan applicants isn’t unnoticed! Some people compare the difference between their biases and external testimonials – is it worth it? Or will it backfire? That actually depends on you! By itself, a personal loan is a great way to acquire additional funds without going through extensive documentation or tedious processes. 

Did you know? Unlike other loans, personal loans don’t have any specific use! You could use the sum to fund a new venture, consolidate debts, purchase a vehicle, pursue higher education, renovate your home, etc. Or, treat yourself to a new laptop or phone!  

With unlimited usage come multiple benefits! Avail the following benefits on personal loans. 

  1. Quick Approvals: The ease of online processes prompts quicker sanctioning of personal loan applications – sometimes, within 24 hours in some cases! 
  2. No Collateral: Opt for an unsecured personal loan to avail funds without providing any collateral 
  3. Flexibility: The versatility of personal loans allow you to utilise the disbursed sum as you see fit 
  4. Minimal Documentation: Provide fewer documents for personal loans, unlike auto or home loans 
  5. Build Credit Score: Easily improve your credit score by timely repaying the loan

Without the limitations of restrictive terms and conditions, a personal loan is the fastest way to gain access to liquid funds without collateral. 

Also Read: Factors That Affect Your Personal Loan Interest Rate

Top 5 Personal Loan Misconceptions in India 

Uh-oh! Silly myths and ill-informed rumours pose an obstacle between you and your incoming financial impediments. Don’t become a victim of false information and misconceptions! Learn about the following debunked myths to prevent the spread of personal loan myths. 

1. “Low Credit Scores are Unacceptable!”

While most believe high credit scores are necessary for personal loans, it’s not true. Of course, a higher credit score is favourable, but other factors could make up for your low scores. Depending on your income and repayment capabilities, the lender will sanction the loan. 

The same applies to those without any credit history! Loans are sanctioned based on your salary slips and debts if any. 

2. “It’s only Available at Banks!” 

Many NBFCs and digital lenders offer lucrative personal loans with more lenient criteria and flexibility. With better chances of loan approvals here, you can easily consider applying for a personal loan through them – even after facing rejection from banks! Furthermore, these modern lenders provide better customisations and diverse loan offers to suit the needs of their customers. 

3. “Only Applicable Salaried Individuals” 

The influx of entrepreneurial ventures has brought new worries along with them. Fortunately, personal loans aren’t one of them! Anyone with a regular source of income is eligible for personal loans, including self-employed individuals. Loans are sanctioned based on their credit history and repayment capacity. 

4. “Got Existing Loans? Rejected!” 

Nobody can foresee financial emergencies, especially those that are recurring! Banks and NBFCs don’t discriminate based on the number of active loans you own. Given you can pay off all existing and new loans, the lenders will continue to sanction loans. 

5. “Unreasonable Interest Rates!” 

Nothing scares people like the thought of paying high interest on personal loans. Though, that doesn’t have to be the case for you. Interest rates levied are based on income, credit history, etc. Furthermore, loans with collateral (secured loans) charge lower interest rates. 

With these misconceptions debunked, it’s time to explore the numerous benefits of personal loans touted by banks and other lenders. This time, don’t let others’ overly-cautious beliefs and myths dissuade you from applying for a personal loan!

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