Did you know that many borrowers don’t go for the personal loan facility? It is because they believe that personal loan foreclosure before tenor will lead to a huge penalty!
Yes, but that is not true! It is because most of the reputed banks and non-banking financial companies (NBFCs) don’t charge for personal loan foreclosures.
Just like this personal loan foreclosure myth, many other personal loan myths also bother people.
On that note, let this post provide you with some leading personal loan myths in this post and debunk them!
What is a Personal Loan?
The personal loan facility also comes with zero collateral, no restriction on how you use the loan amount and quick disbursal. A personal loan is money that you get from a bank or NBFC company for almost any reason and return back with interest rates as per the guidelines of the bank or NBFC company. Easily to get with any issue with minimum documentation work. It is a facility that offers you quick money based on your eligibility and other factors. If you have the required eligibility, then you can get the loan approval for as high as up to Rs.25 lakh. What’s more, borrowers with a credit score of 750 and more can get the loan approval at a lower rate. Nowadays an increasing number of customers are taking personal loans for their requirements. They also convert their personal loan into monthly instalments (EMIs). It’s easy to pay your loan amount method.
What are the common personal loan myths?
Myth #1
Personal loan foreclosure means paying higher penalty charges
As discussed earlier, many people believe that personal loan foreclosure invites hefty charges for availing the facility. The fact is that if you wish to foreclose the personal loan before the end of the scheduled tenor, then you can do that. Most lenders in India don’t ask you to pay any extra penny. Hence, you can go for personal loan foreclosure. Similarly, for making prepayments, you also don’t have to pay any money.
Myth #2
Personal loan interest rates are always high
It is true that personal loans are among the costliest forms of debts, along with credit cards. But it may not always be true that it will cough up a higher rate of interest. If you have not maintained a robust credit score, then the rate of interest may be higher on it. Applicants with a clean repayment, income history, along with a robust CIBIL score, can enjoy lower interest rates on personal loans. Lenders may reward them with a lower rate of interest, and they can also negotiate for it.
Myth #3
You can’t apply for a personal loan if you have existing loans
It is true that banks and NBFCs do evaluate the repayment capacity of the next loan while evaluating the eligibility for the next loan. Hence, they wish to sanction the applications of those having the debt to income ratio of 60%. Therefore, if your debt to income ratio is less, then you can apply for a personal loan despite having other loans.
Myth #4
Only banks offer personal loans
It is not true! Yes, banks are the first preference for many when it comes to availing personal loans; they are not the only sources. Nowadays, you can also apply for a personal loan with a non-banking finance company (NBFC) and other small institutes. They will help you to get the maximum amount of loan as per your requirement.
Myth #5
Lower CIBIL score means loans not being approved
It is another myth that many prospective personal loan borrowers believe to be true! But it is a myth. Yes, having a poor credit score does mean that your application may not be approved. But in most cases, lenders ask you to pay a higher interest rate to sanction your loan request in the event of a lower credit score. It means if you have a low credit score and you think your personal loan application will not be approved, so you are wrong.
The leading myths concerning the personal loan and personal loan foreclosure are now busted.
You can now breathe easy and apply for a personal loan with enhanced confidence!
