Common Personal Loan Myths

Jack Prot

Personal loans are one of the most popular sources of quick money. One of the hassle free ways to get your monetary requirements fulfilled almost immediately would be – availing unsecured loans. Despite the rise in its demand, there are several people who still shy away because of some misconceptions they have heard and not bothered to confirm. The point is to stay informed of the actual picture, so that you can make the right choice and not falter at the time of application.

Here are some of the myths about personal loans, demystified:

– Can Personal Loans be availed if I already have an existing loan or loans?

The one thing lending institutions look at would be your ability to repay the loan you’re about to take. However, if you happen to have too many loans or credit card bills, it doesn’t mean you can’t avail a personal loan. There is a facility called debt consolidation where in you get to combine your debt from various institutions into one personal loan. This will definitely give you a better control over your debt burden since you will now be paying a single installment instead of multiple.

– Why are the interest rates unreasonable?

It is a fact that interest rates of loans that require no guarantor are slightly higher when compared to conventional loans like secured loans. The reason being, these are unsecured loans that require no collateral or security, it is only natural for banks to ensure that their money will be repaid. If you are keen on getting the best interest rate available then you will come across various seasonal offers which are definitely worth taking up.

– Can I apply more than I require?

Applying for any type of loan beyond your repaying capacity is generally not a good idea. You may come across several agencies that claim to give you the maximum loan amount (which is usually beyond your repaying capacity) to enjoy so called maximum benefits. Don’t get fooled by that because the lending institutions never approve when it exceeds your repaying limit. Always remember, borrow only what you require so that a) you can save up on unnecessary installments and b) you can easily avail other loans when required at a later stage.

– Can I apply for a personal loan at multiple institutions?

Although it isn’t against rules to apply at multiple institutions for a loan, but if even one bank is aware of your application across various institutions, then it is only going to further delay your process of getting loan immediately and increase you chances of rejection. So it is safe to not apply at multiple institutions so that you have the best chance of getting your loan approved.

– Is my credit rating the deciding factor for my loan approval?

Your credit rating is one of the important factors for your loan to be approved or rejected, however it is not the ONLY factor that decides for your application. Other factors such as income, company category and overall profile score also play an equally important role.

There are going to be several other questions that come to your mind, which is why you need to approach the right people when it comes to your personal loan application.

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