10 Personal Loan Myths Busted

Sep 05, 2017 01:58 PM IST |

Check out some long-running assumptions and get some smart direction before you enter this space

In today’s era, finance has turned a new leaf. People are being facilitated financially in many ways by banks and availing loans such as medical loan, home loan, car loan, business loan, etc. has become reasonably easy.

Along with these loans, Personal Loan is also an attractive option given by banks. But people are still not clear about many aspects there. There are certain myths which should be looked at.

1) People tend to believe that these loans take a very long time to process. Personal loans can actually have a quick approval cycle with the right documentation and processes.

2) Various financial institutions besides banks also give personal loans, depending upon your requirement and credit score. A personal loan need not be given by only your bank.

3) Comparing interest rate and other factors is not tough or time-consuming. With Internet’s help, comparisons can be made as to what rates are being given by various banks and other money lenders and, thereby, taking a prudent decision.

4) Not only the salaried people of India but NRIs, self employed people and businessmen can also have this facility.

5) In comparison to other loans, this loan may look expensive but if we compare it to the credit card rates it is on the lower side as the latter ranges from 22-36 per cent.

6) People think that these loans have no advantage of tax, and that’s wrong because many tax deduction possibilities are around if one plans properly.

7) Credit profile is not the same as earlier. 

Some financial institutions are interested to give loan even if you have a low credit score and consideration of other factors like the repayment capacity etc can come into play here.

8) In some situations, where people have more than one debt to pay it is difficult to find a smooth way. In this case also personal loan comes as a savior as one can repay all the debts and can have only one rate of interest.

9) Sometimes the fear of not getting the loan at the required time may also lead one to believe that not one source is enough and one can start applying to more than one lender. But one has to be pragmatic and prudent here.

10) Do not apply for more than what you actually need. When you do so, you will always bear the extra pressure because you have to repay more. And God forbid, if you could not honor it then your credit score will turn low and your credibility will be on the unattractive side which can limit you from availing this facility in future.

So, in order to avail the benefits of Personal Loan, one should go through the above points and then venture forth. Opt for timely and wise guidance to ensure you on the right path.