Many people are attracted to taking out personal loans since they offer various benefits to borrowers. However, this type of loan can be confusing at first, especially for those taking one out for the first time. Also, there are many misconceptions about this kind of loan—keep reading for five persistent myths about personal loans and the truth about them!
MYTH: They Have High-Interest Rates
The prevailing notion about personal loans is that they have high-interest rates. However, they can be affordable—if you have a good credit score, you can qualify for loans with a low-interest rate. If you want to take out a personal loan, spend some time examining different lenders and comparing their rates. When you do enough research, you are bound to find a lender who approves personal loans for people with bad credit.
MYTH: Bad Credit Means Loan Rejection
Although having a good credit score helps, it is not a requirement for eligibility. Many lenders approve personal loans to people with poor credit. Lenders can also consider your debt to income ratio, monthly income, and employment history.
If you have a steady income, consistent employment, and a low debt to income ratio, you can qualify for a loan even if you have a bad credit score. Note that your credit score does affect the interest rate you get and the amount you can take out, so it’s still important to shop around for the best rates.
MYTH: It Is Difficult to Get an Approval
People think it is hard to apply for a personal loan, but this is entirely false. You can even do this online—all you have to do is fill out an application and wait for your approval. Qualifying for a personal loan takes less time than getting a car loan or a home loan.
MYTH: It Negatively Affects Your Credit Score
If you want to protect and maintain your credit score, you might be unsure about applying for even a small personal loan, especially if you’re worried that a hard inquiry would change your score. Though credit checks take off a few points from your score, you stand to gain in the long run when you get a personal loan.
For example, if you want to use a personal loan to unite high-interest loans, it can improve your credit utilization ratio. This ratio shows the percentage of your credit limit on hand—transferring your credit card balance to a personal loan will clear out the credit available.
MYTH: It Takes Time to Approve Personal Loans
Many borrowers think you need plenty of time and extensive documentation to secure personal loans. Although this was true in the past, it is no longer the case today. You can apply for a personal loan and get it approved within as little as 48 hours.
Many financial institutions are moving to completely paperless systems, so taking a loan out is as easy as filling out a few online forms and waiting for the result!
Personal loans are an excellent option for funding various needs. However, many people still have misconceptions about them. With the right amount of research, though, you can get approval for your loan—salaried, self-employed, good credit, or bad, there is a lender who can help you meet your needs!
Let Athens Finance help you reach your personal goals. We offer personal loans in Athens, AL, and we guarantee fast, convenient processing, free from hidden fees. Call us today for more information!