Sometimes we find ourselves in some unenviable financial situations that require immediate funds, e.g. marriage. Personal loan is an easy option that can fulfill the need at that moment. Even if we already have previous debts we cannot step back from our responsibilities and commitments. We try lot many options to get the funds so early but may not find the appropriate one that suits our needs. Borrowing a loan from the bank is one of them too. This may be due to the stories that we have heard before about the myths of taking a personal loan and are reluctant to take a next step.
The fact is, that many people hesitate to borrow a personal loan despite the fact that personal loan helps millions for the betterment of their lives. Outdated perils, facts and stories have created lots of myths over the years. Let’s move on to explore the facts and clear the clouds from the fiction.
Myth: Personal Loans charge exorbitant interest rate
An average rate of interest offered by different lenders for personal loan varies between 12 – 16%. This might seem to be high but if compared to credit cards, the paybacks are too low as interest rates towards credit cards can hover anywhere between 32% – 45%. Yes, in case of emergencies we do use credit cards but we should be careful about the repayment of the due amount on time. In present scenario, it is quite easy to avail a personal loan and being unsecured it does not require any collateral. So, in case of quick cash in hand Personal Loan is a better option.
Myth: Personal loan amount can only be used for personal use
However, the term is a personal loan but you can use the loan amount for any purpose. The lenders are not interested to know your intensions to borrow the amount as long as you repay your EMI’s on time. The borrowed amount can be used for business or education purpose. While starting a new business, your company may be ineligible to procure a loan because of the lack of credit history. A personal loan can prove to be a savior at this time. A personal loan can also help to consolidate your multiple debts into one. This won’t make the debt vanish but help to manage a single loan with an affordable interest rate instead of multiple loans with varying interest rates.
Myth: Forget about personal loan if your credit score is poor
Poor credit score does not eliminate your chances of borrowing a personal loan. Though, the impact would come on the interest rates on which the loan is processed and the amount your lender agrees to lend. This is because of the potential risk of being a defaulter for the lender. These loans may come with certain limitations but with changing market lenders have come up with special schemes to cater the customers with poor ratings.
Myth: You can’t apply if you are a salaried employee
It is generally believed that to borrow a personal loan, a borrower has to be a self-employed professional. It’s a myth that the loans borrowed by self employed professionals are considered as business loans not the personal loans. Personal loans are designed specifically for the salaried employees.
Myth: It takes too long to get a personal loan approved
Many times it is believed that a personal loan approval take a lot of time which is too far from the truth. As compared with other financial products a personal loan is approved with minimum documentation and time. Even nowadays, a personal loan can be applied online where the lender send the representatives to complete the documentation and the loan is processed. With appropriate circumstances the loan amount is disbursed within 72 hrs of the application.
Regardless of what you have heard before about the loan and its procedures, the perils of the personal loan can be solved at Mudra Home and the financial consulting firm guides you to avail the financial products at the best available interest rates. As the personal loan is not considered as an income, you are eligible to avail tax benefits on the same. The financial products or the personal loan should not only be compared on the basis of interest rates but also look out for the additional fees incorporated in the loan structure. So, before you need immediate funds for a short term financial crisis, forget the myths or the stories heard before and do consider availing a personal loan or just put up a query at Mudrahome.