List of common misconceptions about personal loans
Low CIBIL score leads to loan rejection. One will know more about the loan when you visit the Canara bank website as they offer Canara Bank personal loan, with easy process and with low documentation.
Many borrowers assume that a low CIBIL score would result in the loan application being rejected. While an individual’s credit score is a factor that is taken into consideration when evaluating their loan eligibility, other factors take precedence over a low credit score. However, it is noted that the rate of interest charged for individuals who has a low credit score tends to be higher than those individuals who have a higher credit score. Personal loans have a high-interest rate.
Several individuals believe that personal loan interest rates is generally very high. However, this is not always the case. In many cases, financial institutions set interest rates based on the individual’s repayment capacity and credit score. Individuals who have low credit scores are generally provided loans at higher interest rates. Borrowers with a good credit score and a good track record of repayments can get a personal loan with an interest rate as low as 10.99% p.a.
Another misconception about personal loans is that most people think that personal loans are offered by a bank only. While banks do comprise a majority of the financial institutions that offer personal loans, there are several Non-Banking Financial Companies (NBFCs) that offer personal loans. In some cases where banks reject an applicant’s application, NBFCs and other lenders are willing to accept loan applications from these borrowers since their loan eligibility criteria are more flexible than those set by banks. Personal loans cannot be availed of if you already have an existing loan.
Many loan applicants believe that they cannot avail of a personal loan if they are already repaying an existing loan. This is not true and the same criteria are applied to sanctioning a second personal loan as is for the first one. Lenders will accept loan applications based on the borrower’s repayment capacity and their current income. The application will either accepted or rejected.
It is also a common belief that those individuals who have a steady flow of income are more eligible to apply for personal loans. Another myth is how personal loan applications are evaluated. For salaried individuals, having their application accepted is easier because of the flow of income. However, self-employed individuals can also avail of personal loans and the approval of the loan amount is based on the individual’s credit history. However, the amount that is sanctioned might depend.
Another misconception about personal loans is that the borrower cannot repay the loan amount before the end of the loan tenure. The reason why most individuals think this is because personal loans tend to have a much shorter tenure than other types of loans. However, borrowers can repay the loan amount before the loan tenure ends. Most banks and financial institutions have a minimum tenure by which individuals have to pay the monthly EMI payments.
Some borrowers believe that the processing time for most loan applications is very long and requires a lot of documentation. This is true many years ago, but now, applying for a loan and having the amount coming to your account can be done within 2 to 3 business days. Additionally, several banks have the instant loan option that disburses the loan amount to the borrower’s account within minutes of applying. Furthermore, many financial institutions are moving towards a paperless process that does not require the applicant to submit physical copies of any of their documents.
Availing of a personal loan is no longer a long and arduous process. Some lenders offer potential customers the facility of applying for a personal loan online and also inform customers of the amount that they are eligible to borrow based on their income.
Also Read This-Why should I compare personal loan interest rates?
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