Personal loans are one of the most popular forms of credit that people choose when they need money quickly and want to meet their financial needs temporarily. Personal loans offer instant loan disbursement and flexible repayment period, which becomes an excellent choice if you are in an emergency situation and need financial assistance. However, many myths exist about qualifying for a personal loan. Let’s debunk the five most important myths
Myths About Personal Loan Eligibility
1. A high credit score is the only criteria for approval
Without a doubt, many lenders will approve your application if you have a high credit score of 750 or higher, but this is not the only determining factor. Lenders also carefully evaluate your income, employment history, debt-to-income ratio and your credit report, along with your credit score. If you don’t have a high credit score, you may still be able to get a personal loan. In this scenario, you may be offered a high interest rate along with a shorter loan amount and repayment term.
2. Only salaried employees are eligible for a personal loan
Although salaried employees do receive a benefit if they already have a salary account at the bank where they want to apply for a personal loan, self-employed people are also eligible for a personal loan. Having a stable source of income is an important aspect of qualifying for a personal loan. However, if you are a salaried employee but do not have a stable salary, you may not qualify for the loan. For self-employed people, your company statements, tax returns and other documents are very important for approval.
3. Personal loans require a long approval process
While this was the case with traditional personal loans, the personal loan application experience has completely changed with the advent of technology. Now you no longer have to stand in line and fill out long forms when visiting the bank branch. With the convenience of digital KYC and online applications, you can complete your personal loan application process in no time. This not only speeds up the process, but also makes it safer and more convenient for you. Lenders now also offer instant loans that are pre-approved and offer fast loan disbursement so you can access funds immediately.
4. You cannot apply for a personal loan if you do not provide collateral
Personal loans are unsecured loans that do not require collateral upon application. So you can easily apply for a personal loan without pledging any collateral. In case you may not be able to provide a healthy credit score but want to get a high amount for the loan, in this case you can provide collateral which will give the lender assurance that you are able to repay the loan and that you will not repay the loan. any standard.
5. You can only apply for a personal loan from a bank if you have an existing bank account
If you have an existing account with the bank where you plan to apply for a personal loan, you can get a pre-approved loan that will give you immediate access to funds. However, if you do not have an existing account, you can still apply for a personal loan from any bank. The only difference is that you may not get a pre-approved offer and have to go through the entire application process.
In conclusion, you must understand that personal loans offer higher interest rates than other loans available in the market. Before applying for the loan, it is advisable to explore the different options available that may better suit your budget.
(Note: Taking out a loan comes with its own risks, so caution is advised)
