Personal Loan Myths: Understanding the Realities of Borrowing

In our guide, we clear up confusion about personal loans in India. We explain how they affect credit scores and help those with bad credit or irregular jobs. We also talk about why personal loans can be better than credit cards and how quickly you can get them from online lenders. Whether you're new to personal loans or want to use them better, our guide has easy-to-understand info to help you manage your money wisely

Myth: You Can't Get a Personal Loan with a Bad Credit Score

In India, you can still get a personal loan even if you have a bad credit score. Some loans are secured, but there are also unsecured personal loans available. These unsecured loans usually have higher interest rates and more fees.

Myth: Only Banks Offer Personal Loans

Personal loans in India are offered by many lenders, not just banks. Non-Banking Financial Companies (NBFCs) and online lenders often have competitive interest rates and quick processing times. Some can decide in minutes and provide funds within two days.

Myth: Personal Loans Always Hurt Your Credit Score

Using personal loans responsibly can actually help improve your credit score (CIBIL score). The key is to make on-time payments. Applying for a personal loan will cause a temporary dip in your score, but regular, on-time payments can boost it over time.

Myth: Personal Loans are Worse than Credit Cards

For people in India with good CIBIL scores and stable income, personal loans often have lower interest rates than credit cards. Personal loan rates can be under 10%, while credit card rates are usually over 20%. You might save on interest by using a personal loan instead of a credit card.

Myth : Personal Loans Take a Long Time to Process

Personal loans in India are quick to get. Many online lenders and NBFCs can approve your application in one to three days and deposit funds just as fast. Some even offer same-day funding after approval.

Myth: You Need a Salaried Job to Get a Personal Loan

In India, you don't need a salaried job to get a personal loan. Lenders like to see a steady income, but if you're self-employed or have other income sources, you can still qualify. You may need to provide tax returns or recent 1099 forms instead of pay stubs.

Myth: You Can't Get a Personal Loan if You Have Another Loan

Lenders in India check your debt-to-income (DTI) ratio when you apply for a loan. Even if you have another loan, you can still get a new one if you can handle the payments. Lenders will look at your income, current debts, and CIBIL score to decide if you qualify.

Bottom Line

Personal loans can be very useful if used wisely. They can cover almost any expense, often don’t need collateral, and usually have lower interest rates than credit cards. Before getting a personal loan, consider the pros and cons, and compare different lenders in India to find the best deal for you.

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