A personal loan is one of the most accessible financial tools available today. Whether it’s for handling medical emergencies, funding education, consolidating debts, or managing lifestyle expenses, a credit can help ease financial stress. Yet, despite its popularity, several myths continue to surround personal credit in India. These misconceptions prevent many potential borrowers from taking advantage of this flexible financial solution.
It’s time to separate fact from fiction and understand how a personal credit really works.
Myth: Personal Loans Are Only for Emergencies
Many believe that personal credit should only be taken in times of crisis, such as medical or urgent financial needs.
Reality: A loan can be used for various purposes, such as home renovation, weddings, travel, higher education, or even debt consolidation. Since it comes with no end-use restrictions, it offers the freedom to use the funds as per your priorities.
Myth: You Must Have a Perfect Credit Score to Get a Loan
There’s a widespread belief that only those with flawless credit scores can secure a personal credit.
Reality: While having a good credit score increases your chances of approval, lenders today evaluate multiple factors, such as your income stability, employer, and repayment capacity. Even if your score isn’t perfect, you can still qualify for a credit with slightly different terms.
Myth: Personal Loans Have Extremely High Interest Rates
A common misconception is that every credit comes with an unreasonably high interest rate.
Reality: With reputed lenders, you can access competitive interest rates based on your profile. Your credit history, income, and repayment record directly influence the rate offered. With flexible tenure options, EMIs can be managed comfortably without straining your finances.
Myth: The Application Process Is Complicated
Many people hesitate to apply, thinking that the process is time-consuming and requires endless paperwork.
Reality: Thanks to digitalisation, applying for a personal loan is now easier than ever. Most lenders offer online applications with minimal documentation and instant approvals. Using an app, you can apply, get approved, and even receive disbursal directly in your bank account in just a few steps.
Myth: Personal Loans Are Only for Salaried Individuals
Another myth is that self-employed professionals or business owners cannot apply for a loan.
Reality: Personal credits are available to both salaried and self-employed applicants. As long as you can show consistent income proof and repayment ability, you can qualify. This makes credits a versatile option for diverse financial needs.
Myth: Taking a Loan Hurts Your Credit Score Permanently
Some people avoid applying altogether because they believe loans damage credit scores.
Reality: On the contrary, timely repayment of a personal loan can actually improve your credit score. Defaulting can negatively impact it, but responsible borrowing builds financial credibility and makes it easier to access credit in the future.
Myth: Prepayment and Foreclosure Are Not Allowed
Borrowers often assume they will be locked into the credit for the entire tenure.
Reality: Many lenders permit prepayment or foreclosure of credits, often with minimal fees. This flexibility helps borrowers save on interest and close their loans earlier if they have additional funds.
Choosing the Right Lender Matters
While busting myths is essential, it is equally important to choose a trustworthy lender. Consider:
- Transparent terms and conditions.
- Competitive interest rates.
- Flexible repayment tenures.
- Quick approval and minimal documentation.
- A user-friendly loan app for easy access.
Conclusion
A personal loan is a reliable and flexible financial solution, but myths often cloud people’s judgment. By knowing the facts, you can make confident borrowing decisions without unnecessary hesitation.
With features such as no collateral, transparent terms and conditions, quick approval, competitive rate of interest, flexible tenures, and a user-friendly process, Bajaj Finserv ensures that personal loans are accessible, secure, and stress-free for everyone.
