If you’re planning to take up a personal loan, you would be well-advised to dispel some of the myths surrounding them. Here are five common myths you hear almost every day:
Myth 1: Personal Loans come at a high-interest rate
One of the biggest myths about personal loans is that they come with a high-interest rate. The truth is, personal loans are interest-free for the first 12 months or even 24 or 36 months. You can save thousands on your loan by choosing an option that includes 0% interest.
So how much do these low-rate offers cost? Well, you will still have to pay some fees associated with getting approved and setting up your account, but this type of fee is much lower than what most lenders charge for annual percentage rates (APRs).
“Getting a $5,000 loan can be easier than getting a larger loan size. Lenders may view $5,000 loans as less risky than larger loan requests that could expose lenders to greater losses if the borrower defaults” as professionals like Lantern by SoFi say.
Myth 2: The only purpose of a personal loan is shopping
While it is true that you can use your personal loan to purchase consumer goods and services, this isn’t the only way to use it. Personal loans can also be used as investments or even as a way to pay off credit card debt, which means that they’re not just an option for those who need cash upfront.
Myth 3: A personal loan can only be taken by people with excellent credit history
You can apply for a personal loan with no credit history. This is one of the most common myths about personal loans and it is also the most inaccurate. Many lenders will give you a personal loan if you don’t have any previous credit history.
In fact, some lenders will even offer loans to people with bad or poor credit standing as well. It means that there are fewer restrictions on who can get approved for a personal loan than ever before – which means that if you need money now then apply online today!
Myth 4: Taking up multiple loans is beneficial
Many people prefer to take a loan from multiple lenders, but this is not the best idea. It is better to borrow from one lender because you can get a lower interest rate, a better repayment schedule and avoid paying multiple fees.
If you want to borrow money from two different lenders, then you should compare their rates of interest and terms before committing yourself to any agreement.
Myth 5: You should wait until your next paycheck to borrow money
One of the biggest myths about personal loans is that you should wait until your next paycheck to borrow money. However, if you have a credit card debt due and are facing late fees or penalties, it may be more expensive for you to wait than it is to get a personal loan right away.
This can help you pay off your credit cards and save hundreds of dollars in interest charges. Plus, if you get a loan now, it will free up some cash so that when your next paycheck comes in at the end of the month, there won’t be any stress over paying bills on time!
The bottom line is that borrowing money can be an efficient way to clean up your finances quickly and easily! With the right information, you can make an informed decision on whether or not you should take out a personal loan.