06 NOVEMBER, 2019

A personal loan is one of the most attractive type of loans in the market. Not only are they required for a wide number of things, they also come without any collateral, making it the most popular option. Despite this, there are many who are not very confident about taking them.

There are certain myths about personal loans that are simply not true, but which often turn people away from them. Here are some of the most popular personal loan myths debunked:

  • You should already have some money
    No. You don’t need to prove to the bank that you already have money, before you ask them for more. This is quite absurd because banks are here to help you when you don't have the cash. The minimum amount that you need to have in your account only applies for secured loans only and in many cases, not even then. All you need to do is show the necessary details such as, income employment credibility, etc. to apply for the loan.

  • Credit Score
    Another myth is that if you have a bad credit score, your loans will be rejected at once. This really depends on the credit score. Most banks do not reject the application outright but will increase the amount of interest on them to make the money back as quickly as they can. Unless you have a really poor credit score, there are very few instances when applications have been denied outright.
  • Only banks can give you personal loans
    This was actually true a few years ago but with the increasing number of banks and lending institutions, you can get personal loans from different places. All you need to do is find the right place and the right rate of interest for the amount you are willing to take and apply in a bank or lending institution of your choice. It is easier now with online applications.

  • Borrowing more than you need
    Many people are tempted to borrow more than they need just to have that extra cash. This is not something that should be encouraged because you will end up paying a lot more and over a longer period, depending on your rate of interest.

These are some of the popular personal loan myths that often befuddle people. Whether you are approaching a bank or a lender, make sure that you read all the documents thoroughly and carefully.

Busting Common Myths About a Personal Loan

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Disclaimer: This Article is for information purposes only. The views expressed in this Article do not necessarily constitute the views of Kotak Mahindra Bank Ltd. (“Bank”) or its employees. The Bank makes no warranty of any kind with respect to the completeness or accuracy of the material and articles contained in this Article. The information contained in this Article is sourced from empaneled external experts for the benefit of the customers and it does not constitute legal advice from the Bank. The Bank, its directors, employees and the contributors shall not be responsible or liable for any damage or loss resulting from or arising due to reliance on or use of any information contained herein. Tax laws are subject to amendment from time to time. The above information is for general understanding and reference. This is not legal advice or tax advice, and users are advised to consult their tax advisors before making any decision or taking any action.