Opting for personal loans would be a great choice to help you bail out of a financial crisis. They are a great option because you don't need any collateral, no restriction on end-use of funds, quick loan approval, minimum documents and many more. However, there are some common myths regarding a bank personal loan, which often leads to people opting for more expensive or time-consuming means to meet their emergency needs. Let's talk about these myths so that you don't shy out when you apply for personal loan online.
1) Only salaried individuals can apply for personal loans
No, personal loans can be availed by both i.e. salaried as well as self-employed individuals. Self-employed professionals can borrow personal loans based on their credit score. In case of the personal loan, lenders evaluate the cash flow and credit history of the borrower. His business is not evaluated for financing personal loans.
2) You get no tax benefits on a personal loan
Did you know there are many tax benefits available on personal loans? Borrowers can claim the tax deduction on the interest portion of the EMI. There is no deduction on the principal component of the loan. Note, the tax benefit on your bank personal loan is only allowed if your expenses are valid and reasonable.
3) Can be used only for personal reasons
The best part about availing a personal loan online is its end use of the funds. The funds can be put to meet any of your emergency expenses. Even you can invest the funds in your business also to grow it further.
4) They have a tedious approval process
In this era, getting a personal loan has become quick and easy with the presence of online digital lenders. You can apply through them online and avail of funds in less than 2 days. Make sure you check your loan eligibility by making use of online personal loan eligibility calculator and personal loan EMI calculator to check your monthly instalments as per the duration of your loan.
5) You can't get a personal loan if you have an existing loan
Borrowers can still apply for a personal loan if they have an ongoing other loan. While approving your bank personal loan application, lenders evaluate your previous repayment history to know whether you will be able to pay the loan on time or not? So, even if you have an existing loan in your name you can still get a personal loan, providing that you have a good credit score and repayment capacity.
So, these were some of the common misconceptions about personal loans. Knowing about them will help you get the best deals on your next personal loan application. With a good credit score, you can avail the loan at a low rate of interest.
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