What is a Personal Loan?
A personal loan refers to money that is borrowed from a financial institution, for personal (not professional or business) use. Compared to larger and long-term loans, personal loans are taken into short to medium terms. Generally personal loans are used to pay for one-time or short term expenses where a borrower doesn’t normally require disclosing the specific reason for taking the loan. This type of loan is ideal to resolve current financial needs.
It is a type of unsecured loan which can be availed on the basis of various criteria. Level of income, employment history, credit score and scope for repayment are those specific criteria. Considering these criteria and lender, interest rate of personal loan can be anywhere from 11.29% to 35%.
Even though personal loan is the most famous loan in the country, there are some myths circling around it for quite a few while. We have tried to bust these myths to help you borrow right…
MYTH 1: Personal loan takes a lot of time to process
Personal loans eligibility criteria and document list is very easy compared to other types of loans. Banks and NBFCs are willing to give personal loans to people all the time. These are known as the easiest loans in the country. Thus those who think that personal loan approval takes a lot of time to process, clearly live in a world of myths.
MYTH 2: You can’t get a personal loan if you don’t have a strong credit score
As personal loans are a type of unsecured loan, applicant’s credit score plays a vital role in approval process. A perfect credit score is considered of 750. But many banks offer personal loan for a credit score of as low as 625. So the borrower can get a personal loan even though he or she does not have a strong credit score.
MYTH 3: If your credit score is bad, you’ll require collateral to get a personal loan
As said before, personal loan is a type of unsecured loan. It does not require collateral in any case. If by any chance, you have a bad credit score and want a personal loan, then bank and NBFC charge higher interest rate on your loan amount. This interest rate will be a little more from the interest rate availed to a person with strong credit score. But you surely do not require giving collateral for personal loan.
MYTH 4: Personal loan means addition to your debts
Personal loan is an excellent way to pay off all your current debts. By opting one personal loan, you can pay off all your loans as taking personal loan for debt consolidation. Thus personal loan does not increase the burden of debt rather it helps you to pay off multiple debts.
MYTH 5: Only major banks give personal loans
As personal loan has easy eligibility criteria and require minimum documents, it’s one of the popular loans in the country. Thus almost all banks and NBFCs offer a personal loan. Be it a bigger or small financial institution, everyone is willing to give personal loans to its customers.
MYTH 6: You get a personal loan only if you are salaried
Again a strong hold myth! Personal loan is available for salaries people, self employed professionals as well as businessmen. Everyone can avail this loan by showing latest income proofs.
MYTH 7: You can’t apply for a personal loan online
This myth was true until some time. But now with Ruloans’ latest online application process you can check your eligibility for personal loan and apply for the same in one go by clicking here!
Now that you know all the facts about personal loan, if you still have any queries click here to read more or contact us!
