Personal loans often come to the rescue when you are in need of a large amount of money in a short period of time. Most banks and NBFCs offer a hassle-free procedure for personal loan application and approval, making it an easy solution to financial woes. You can get your loan approved within minutes, and the money credited to your bank account within a few days. The best part, you can take a personal loan for any reason, from funding a vacation abroad to generating capital for your own business. Most banks and NBFCs give personal loan offers that are quite beneficial for people looking for a quick way to gather funds.

Myth 1#. Personal loans are amongst the most expensive loans in the market.

This is one main reason why people stay away from personal loans -they think these are more expensive than other loans in the market. But the truth is that most banks and NBFCs charge 12-14% interest rate, which is usually lower than what you pay to your credit card company. Also, these are unsecured forms of loans, which means that there is no collateral involved, making these a fairly low-risk option when borrowing money.

Myth 2#. Personal loans offer no tax benefits.

Many people believe that there are no tax benefits with personal loans. And while this is partially true, there are ways to utilize your loan and claim tax benefits with ease.

For example, if you’re renovating your home with the help of a personal loan, you can possibly claim tax benefits. The same clause works if you’re using the loan to purchase a new home.

Myth 3#. Personal loans are available only to salaried employees.

This myth is exactly what you think it is - just a myth.

There are cases where people who have started their dream ventures with the help of personal loans and are making it big in the world. Personal loans are available to both salaried and self-employed people. Where salaried employees need to give their salary slips, self-employed people need to submit their bank account statements/IT return certificates to show that they are capable of paying the loan back in time.

Myth 4#. Personal loan approval process is tedious.

It is actually far away from that. You can apply for personal loans online, and sit back while the bank or NBFC sends across a representative to collect your documents. Also, personal loans (and most other loans these days) require minimum documentation. It gets approved within minutes and you get the money within 72 hours from approval.

You can usethe personal loan eligibility calculatoronline to know what amount you’re eligible to borrow, which depends on your income, regardless of whether you’re salaried or you run a business of your own. Once you’ve done that you can apply for a personal loan and wait for approval.

Myth 5# . Apply for a bigger amount than what you need.

Ideally, you should never borrow more money than you need, even when you’re eligible for a higher amount. If you think that by applying for more, you will be able to pay off your first loan installment with it, you’re mistaken. The extra amount will get added onto the principal and that will add to your financial duress instead of easing it.

Myth 6#. You can’t apply for a personal loan if you have existing loans.

You can apply for a personal loan, even if you have existing loans in the mix. If you have too many loans on your name, then it might affect your eligibility to some extent as the lending institution will look into your credit history, credit score, and income to ensure whether you can pay the EMI.

In such a scenario, it is best to opt for debt consolidation, in which multiple debts get consolidated into one and you pay toward one account, making things easier.

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