Surprising Facts about Personal Loan

Personal loans have become the go to choice for short-term liquidity and you can get these short-term unsecured loans sanctioned in less than a week to meet any ‘personal’ expenses like travelling abroad for a vacation, enrolling your child for coaching classes, renovating your home or even paying your credit card bill!

1. You Can Apply for Personal Loans from Multiple Lenders

While it is possible to apply for a personal loan from multiple lenders, it is certainly not advisable. All lenders will look into your previous loan history and current applications under approval. If you have already availed a personal loan before that is still outstanding, the lender may reject your personal loan application or take a longer processing time.

2. A Bad Credit Score Means you can’t get a Personal Loan

Your credit rating does affect your eligibility for a personal loan but past history of having paid a loan and other significant sources of income will definitely factor in while determining your loan approval. Some lenders can issue loans up to a certain limit based on their discretion. Once you repay the personal loan within stipulated period you can improve your credit score.

3. It is near impossible to get approvals

This could not be further from the truth. A personal loan is hassle-free to avail, and most applications can get approved within 24 – 48 hours with fairly minimal documentation.

4. Only Big Banks Provide Personal Loans

Again, this is a common misconception and some banks do not even provide personal loans. However, several NBFCs do provide them and have approval criteria that are not as strict as banks. As NBFCs specialize in providing loans, they have speedy application procedures.

5. You can’t pay credit card bills with a personal loan

Credit card bills accumulate fast with compounding interest rates between 36 – 48%. Hence, a personal loan borrowed at a lower interest to pay the outstanding amount on the credit card. You can also avail ‘balance transfer’ of your credit, which is treated as a personal loan against a credit card.