Five Myths about Personal loans
Personal loans are a great way to plan for the future, whether it is travelling or buying a car, without hurting your financial planning. They help your plans materialise without the burden of over-planning and procrastination. And because they can be accessed with a fair amount of ease, and without collateral, they have garnered much interest in the market. This is the preferred loan type by most customers. However for those still wary of taking a personal loan, allow us to debunk a few myths shrouding the subject.
Banks are the best place to take a loan
This is a commonly held misconception, and the best place to get a personal loan depends on the person’s specific requirements and his credit history. In fact, lending institutions and banks often do not have the same requirements from customers about personal loans, and often it works out advantageous to the customer to take a loan from a non-banking institution.
People with bad credit scores can’t get personal loans
This is a misunderstood concept; low credit ratings or bad scores do not impact your chance of getting a personal loan. Instead, what it affects is the interest rate at which the loan is disbursed. The customer will still be granted a personal loan, but the limitations and interest rates will be higher. Some lenders even choose to work specifically with people who have bad credit history.
House as collateral
Personal loans are typically unsecured loans that do not require collateral. When you search for the best rates on personal loans, look at a variety of information sources. However, with an unsecured loan, the interest rates will be higher as compared to a secured loan that is seen as safer and less risky.
You can borrow more than you need
Although there is a general perception that it is best to borrow more than you actually need, so that you don’t have to apply for a loan time and again, it is generally better to only take a loan for the amount you really require. This ensures that you don’t overspend or create a burden on your financials. Having that extra money sitting in your account might be a temptation to spend more, making the repayment tenure longer than it really needs to be.
Only salaried employees are eligible
This is a complete myth. Most banks today have provisions to lend money to professionals irrespective of whether they’re self employed or salaried. It is generally perceived that entrepreneurs have a hard time availing of loans but this is untrue. Although the documentation required differs depending on whether the person is salaried or self-employed, personal loans are now available for professionals right across the board. Even NRIs with Indian bank accounts can avail of a personal loan with the right documentation.
Bajaj Finserv offers personal loans at attractive interest rates. These loans come with instant approval in as little time as 5 minutes. Within 72 hours of approval the money will be transferred to your account.