Break your myths about loans

Loans play a vital role in facilitating financial support in the times of emergencies and have become part of the modern financial system. The various loan facilities including personal loans, professional loans, business loans, and much more are surrounded by many myths which often lead to misunderstanding and mismanagement of financial responsibilities. Like other financial decisions, taking a loan involves multiple questions, such as:

Which lender to choose for a loan?

Which type of loan to select?

How to be eligible for any type of loan?

While answering these questions related to loans is important, it is equally important to first break the myths around loans as they may affect one’s judgment while finding the answers. Some of the common Myths about Loan are as follows:

• Loans are only for individuals who are suffering through financial trouble.

• Applying for a loan is a long and hassle process.

• Only people who are getting a salary can avail of the loan.

• Taking a loan will only increase your debt burden.

• A low credit score means loan rejection

• Loans cannot be availed if you already have an existing loan

• Every loan requires a collateral

• It’s difficult and complex to apply for a personal loan

So, now let's debunk the myth of the different loan categories and focus on their reality rather than believing on that myth without looking into the true story:

Personal Loan Myth:

If you are a first-time borrower for a personal loan, then there are chances that you may be nervous about availing funds. However one may presume that availing an Instant Personal Loan Online or offline is a time-consuming process or it may involve high interest rates or you are supposed to put collateral against your loan. There are various myths associated with instant personal loans that often scare individuals from availing one especially when they really need access to financing support. Here are some instant personal loan myths:

Personal loans are just offered by banks only:

The most common misconception about personal loans is that only banks offer personal loans. But apart from banks, there are multiple non-banking financial companies (NBFCs) that provide personal loans at competitive interest rates. There are few situations where banks may reject the loan application due to strict norms but NBFCs accept the loan application in this case at similar interest rates and with more customization.

Only salaried individuals can apply for a personal loan:

This is another common myth that only salaried individuals with good incomes are eligible to apply personal loans online. However, individuals who are self-employed and even business owners can also apply for instant personal loans.

Rather than the profession, the individual’s borrowing capacity and ability to service the loan regularly is seen while availing a personal loan online.

Business loan myth:

Business loans are often taken by small businesses and start-ups for expanding their business or for other financial expenses. While sometimes it can be difficult to get a business loan disbursed quickly, the Indian government has introduced many loan schemes and policies too, that are helping small businesses to get easy and collateral-free or unsecured loans at lower interest rates. However, there are various loan myths and misunderstandings about instant business loans online, that exist in the minds of business owners, and due to this, they are worried about borrowing the instant business loan online.

Business loans need collateral:

Most of the banks and NBFCs ask for collateral as security for the loan, there are instant business loans online that don’t require any collateral to be given as security. Many upcoming business owners don’t have collateral to offer as they are just beginning their venture. But these businesses also need financial support the most if they don't have anything to submit as a security amount.

Many banks or financial institutions offer unsecured business loans and do not ask for any security. In this case, the borrower may have to provide a personal guarantee and will have to promise to repay the loan amount along with the charged interest rate.

Only huge loans are approved:

Another myth of business loans is that banks are bound to offer loans for a large sum of money because the return on investment is high for these business loans. However, there are many Microfinance Institutions and NBFCs that avail small business loans to consumers. Banks also have many small business loan schemes that seek to disburse loans without any security at low loan interest rates for new businesses, MSMEs, and women entrepreneurs. The fact is that small business loans get approved quicker than loans worth a substantial sum of money.

Mortgage Myth:

Mortgage myths are getting a blaze around on the internet making it much harder to get the loan without any insecurities related to the loan. In this section, I will clear up some of the most common mortgage myths and will make you aware of the most important truths about availing a loan. So don’t let these mortgage myths intimidate you.

Applying for a Mortgage will Hurt Your Credit

This mortgage myth is a little bit. Whenever a person applies for a new loan, your credit score will change a little. However, this temporary decrease in the credit score will usually only last a short time. Some of the research shows that if you open a large number of various new credit lines, it might be possible that you are getting ready to make a risky financial move. This move will make you a riskier applicant for each individual lender. When you apply for a mortgage loan, your credit score will temporarily drop. You can also maximize your chances of getting mortgage loan approval by avoiding the application for new credit cards or loans in the months when you are leading up to your mortgage application.

Conclusion

After reading this blog I'm sure from now onwards you don't have to be scared of these loans as you are now aware of the actual facts and truth regarding different loans. Sticking to the myths can badly affect your financial health, so instead make wise decisions and choose the best loans in India through our website www.mymudra.com.

Also read: Apply for a ₹5 Lakh Personal Loan with Flexible EMIs