April 18, 2024
5 Myths and Actual Facts about Personal Loans that You Should Know
Let’s get to the Basics, first.
What is a Personal Loan?
It is a type of unsecured loan provided by various financial institutions, NBFCs and Banks. Here, the lender evaluates the credit score, income, and other crucial information of the borrower.
What is a Personal loan typically used for?
- Vehicle purchase
- Wedding expenditure
- Home Renovation
- Travel expenses
- Medical emergencies and more
Let’s understand the 5 Myths and Actual Facts about Personal Loans -
1. Myth - Personal loans attract Higher Interest Rate.
Actual Fact - The interest rate on personal loans is quite less when compared to interest on Credit cards. The interest rate depends upon factors that are related to your Credit score, repayment ability, creditworthiness and more.
2. Myth - Personal loans are not available for people with Bad Credit scores.
Actual Fact - This is so not true. Personal loans are provided to a person based on the eligibility criteria set by the financial institutions/ NBFCs/Banks. Therefore, personal loans are provided to people with a Bad Credit score, but at a higher interest rate.
3. Myth - Personal loan impacts your credit score negatively.
Actual Fact - This is a half-cooked story. When you apply for a personal loan, the lender raises a hard inquiry on your profile to verify the information. This creates a temporary impact on the credit score. Timely and responsible repayment of loans improves your Credit Score significantly.
4. Myth - Personal loan adds more to your Debt.
Actual Fact - Not only Personal loans. You can take any type of credit and attract more debt if and only if you don’t know how to use it wisely. The smart way to use a personal loan, in case you have other debts and obligations is to repay them by using the existing personal loan. This is known as debt consolidation. Then you just owe money to the institution from which you took a Personal loan at a comparatively lesser rate of interest.
5. Myth - Personal loans require Collateral.
Actual Fact - In simple words, no. As mentioned, Personal loans are unsecured which clears the air around Collateral. The lender cannot claim any right over your assets if you fail to make the repayment. However, non-repayment of loans might impact your credit score that’ll make it difficult for you to get loans in future.
If you are seeking an instant personal loan then -
You should contact Nitstone Finserv. We provide Quick Approvals on Gold Loans and Personal Loans, ensuring disbursement within 24 hours which makes your journey hassle-free with endless financial opportunities.
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