When you are looking at a financial shortage, a personal loan is the best way to deal with it. The process from applying for a personal loan, getting it disbursed directly into your accounts is a quick process.
However, there are myths about personal loans. These myths stop you from applying for a personal loan when you need it the most. So, this is why today we wanted to break those myths. Hence, when next time, you want to apply, you can do without giving any second thought. Please keep reading to know more.
Myth number – 1: I have a low credit score; my applicant will get rejected
There is no doubt; Credit Score is one of the significant factors that decide whether you will get a personal loan or not. When you apply, a lender first looks at a credit score, then to other factors. There is Income factor, a job profile, Employer profile. When the lender reviews all these factors, then they decide.
So, if your credit score is low, but other factors are stable, then there is a high chance, your application will get accepted.
The only thing you should keep in mind is the interest rate. When a credit score is low, the personal loan interest rates are likely to go high. Lenders such as Fullerton India personal loan considers every factor before offering the personal loan.
Myth Number -2: The Personal loan interest is Too high
After the myth of low credit score, it’s time to address the myth of high-interest rates. You should know the personal loan interest rate is decided on the credit profile. If your credit profile is right, then the interest rate would be as low as 10.5%. This is the lowest interest rate; a lender will offer you.
However, if your credit profile is not good, then it is likely, the interest rate will go up. The reason is, a personal loan does not require a collateral. So, you can not say, the interest rate is higher. In other traditional loans, you have to submit collateral.
Myth Number -3: Every Lender Charges Prepayment Charges
Prepayment means when you want to pay off the entire loan before the loan tenure. Some lenders charge on it. It can go from 1% to 5% of the loan amount. However, not lender charges on loan foreclosure. It varies from lender to lender. Then some lenders do not allow prepayment at all. You have to pay the EMI on pre-decided terms.
Myth Number -4 I already have a loan, I won’t get another
This is simply not true. Whether you will get another loan or not depends upon your income. The EMI/Income ratio of 60% is the ideal ratio to decide. It means how much you are spending on the EMI of your income. If it is 60% of the income, then you won’t get the loan.
If you are not, then there are high chances, the lender will accept your application. There are two ways of calculating your income. Some lenders use the net monthly income for ratio, and some use gross monthly income.
So, these are some of the myths which we have busted today for you. If you have any else myth regarding the personal loan, do let us know. We will clear it for you.