Top 10 Myths About Personal Loan

Myth 1:  Personal loans are the costliest loans

Yes, it is true that personal loans are costlier than secured loans but they are not definitely the costliest one. The interest on a personal loan starts from 10.99% and can be as high as 24%. The interest rate on a personal loan is much cheaper than the most commonly used credit cards. 

Myth 2:  Availing a Personal loan goes through a tedious process 

Many people live with the myth that availing a personal loan is a tedious process. Whenever there is a comparison on a credit card and a personal loan occurs, many people tend to go for a credit card swiping as the fund can be released instantly. But the fact hidden behind is that availing a personal loan has a simple process. 

Myth 3:  Personal loans are exclusively for salaried persons

Many people who are self-employed or having their own business have a misconception that personal loans are tailor-made for salaried persons. But the fact is that personal loans can be applied by both salaried and self -employed persons.

Myth 4:  Personal loans always need a good credit score

There are many people who are in the misconception that without a good credit score one cannot get a personal loan. It is true that credit score is one of the very important criteria which is checked before gauging the creditworthiness of a person. 

Myth 5:  There are no tax benefits on a personal loan

This is another myth which is going to bust here. one can gain a tax benefit even on a personal loan if the borrower has used the borrowed amount for the education purpose of self or children. 

Myth 6:  All lenders charge the same

It is just a myth that all lenders charge the same rate of interest on personal loans. The interest rate charged on personal loan differs lender to lender. 

Myth 7:  Personal loans are for personal uses only

This is one of the biggest myths that personal loans are just for personal uses. But the reality says that one can use a personal loan for education, business, home renovation etc. too. A business loan is costlier than a personal loan.

Myth 8:  Personal loans can be taken from banks only

There are many people who feel that a personal loan can be taken only from renowned banks. The myth is busted here. 

Myth 9:  You can’t apply for a personal loan if you have existing loans- 

The real face of a personal loan says that one can definitely apply for a new personal loan while he is already servicing the existing ones. 

Myth 10:  A longer tenure is an advisable one

This is a total misconception regarding a personal loan. The tenure of a personal loan is always shorter the better. The interest on personal loans calculated in a compounded way. Hence a longer tenure is certain to increase the cost of borrowing.

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s