5 Personal Loan Myths Which Are Not True At All

Personal loans can be a viable alternative for fulfilling your temporary requirement of cash. However, some common myths associated with such loans deter some people from availing them. Fortunately, these myths are not true. Read on to know more about them.

Personal loans are unsecured loans that borrowers can avail to fulfil their current or urgent financial needs. For example, you can use these loans to fund travelling, weddings, medical emergencies, etc., without worrying about providing any collateral.

While personal loans are popular for the numerous benefits they offer, various misconceptions have mushroomed around them over the year.

Let us uncover some of the more prevailing personal loan myths that are no longer true in the modern era.

1. Loan Processing Time is Long

Long and cumbersome application processes followed by an equally time-consuming approval process are the tales of a bygone era. Today, the whole process is smooth and hassle-free that includes minimum documentation and lightning-fast approvals. With ICICI Bank, you have the option of applying for a personal loan online, where the loan amount is instantly credited to the borrower's bank account.

2. Higher Interest Rates

Yes, personal loan interest rates can be relatively higher than home loans, auto loans, etc., as they are unsecured loans. However, the interest rates depend on various other factors too. Depending on your credit score, credit history, income profile and relationship with the bank, you can get a good offer on the loan.

3. Not Possible with a Low Credit Score

Banks take your credit score into account to decide your creditworthiness. A high score can help you in securing a loan from the bank. However, a low credit score does not result in an automatic rejection of a loan application. You can avail of a personal loan even with a low credit score if you manage to score on other parameters such as income, employment stability, a lower loan amount, etc.

4. Only Salaried People Are Eligible

Having stable employment with a regular and decent salary can certainly help in getting the desired loan amount. However, it is not the sole eligibility criteria. Self-employed persons, business owners, consultants and many more are eligible for a personal loan as long as you have the required loan repayment capability.

5. Personal Loans Can’t Be Taken With an Existing Loan

Banks and other lenders do consider the status of your existing loans before sanctioning a new loan to you. However, this does not mean that your loan application will be rejected if you have some existing loan.

If the bank is satisfied with your income levels and loan repayment capacity, it will sanction your loan amount, even when you already have an existing loan.

Check your personal loan eligibility.

Personal loans can be an answer to your financial needs if used judiciously. All you need is to ignore the myths surrounding them and make your decision based on the facts. Speak to the customer representative to know the correct facts and decide accordingly.