Five Personal Loan Myths That You Need To Stop Following

Personal loans are one of the most popular financial tools nowadays. Whether it's for home renovation, medical emergencies, travel, or even debt consolidation, they provide quick access to funds without requiring collateral. 

Yet, despite their convenience, many people hesitate to apply for personal loans because of myths and misconceptions. Some think getting a loan is difficult, while others worry it will hurt their credit score. 

Here are the most common myths around personal loans in India.

Many people worry that applying for a personal loan will lower their credit score. However, this is not true. Your credit score is affected only if you apply for loans frequently or miss the deadline or default on the loan. On the other hand, paying your EMIs on time can actually improve your credit score. This will also reassure lenders that you are capable of managing your finances responsibly. This will also increase you chances of getting loans in the future.

Another common myth is that some people think personal loans are hard to get. But it is the opposite. With online applications and minimal documentation, the process is now simpler. Banks and NBFCs often offer instant approvals without letting you wait hours in long queues. The only condition required is that the applicant must have a stable income and good credit history. 

It's a common misconception that personal loans are only for salaried employees. In reality, freelancers, self-employed professionals, and business owners can also apply. Lenders mainly look at your income stability and ability to repay rather than your employment type. You just need to show your income proof, such as bank statements, tax returns, or business income statements, to get approved for a personal loan.

Many assume personal loans take weeks to process. Because of digital banking these days, most loans are approved within 24 to 48 hours, and sometimes within a few hours. Some lenders even offer instant loans for existing customers. So, if your documents are in order, you can get the money quickly when you need it.

A lot of people think having an existing loan will prevent them from getting a new one. This is not correct. Lenders check your debt-to-income ratio to ensure you can manage multiple loans responsibly. If your finances are under control, having another loan doesn't disqualify you from applying.