Personal loans can help you with any financial requirement you may have. Despite their simplicity, there are many a myth associated with personal loans. Here we aim to bust some of the common myths people have regarding these loans.
- Most Expensive Loans in the Market:
Compared to secured loans, personal loans are more expensive, but their interest rates are still low compared to credit card interest rates which range from 22% to 36%. Therefore, it is better to opt for a personal loan as opposed to using your credit card.
- Lacking Tax Benefits:
The deductible tax amount of personal loans is calculated keeping in mind the income of the concerned business or the interest element used for the construction of a house or property. Therefore, to say that this loan has no tax benefits, would be incorrect.
- Only for Resident Indians and Salaried Individuals:
Contrary to this myth, personal loans are available to all businessmen, NRI’s, salaried as well as self-employed individuals. In fact, some lenders even provide loans against HRI (house rent income).
- Slow Approval:
The approval process for personal loans is actually less cumbersome compared to other loans. Personal Loans Now in NZ, for example, can get you approved within days or even merely hours.
- Only Banks Give Personal Loans:
The fact is that other than banks, there is a plethora of financial institutions that provide personal loans at a comparatively lower rate of interest.
- Bad Credit Score Affects Your Eligibility:
There are certain institutions that are willing to grant personal loans despite an individual’s poor credit score.
- No Benefits of Paying Credit Card Debts:
A personal loan is a better method to pay off credit card debts. Balance transfer of credit is treated as a personal loan against the credit card.
- Additional Financial Burden:
For people with multiple debts, a personal loan is a good repayment option at a single rate of interest.
- Apply for More Than What You Require:
Avoid borrowing more than your requirement as this will increase your financial burden and lower your credibility in case you fail to repay.
- Multiple Lenders Can Sanction Your Loan:
Although it’s possible, lenders may reject your application knowing you have already applied elsewhere for a personal loan. It is advisable to borrow only from one lender at a time.
Rest assured personal loans are not a bad option after all but a healthier alternative for urgent financial needs.