One of the common things that people do is jump into conclusions without having proper knowledge and understanding about things. Generally, it does not have any effect. But there are a few areas where not having the proper knowledge and believing in misconceptions will have negative impacts on our lives. One of those areas is the banks and loans offered by them. It is mandatory that everyone should have proper knowledge about them because there are good possibilities that you might need them in our lives. Even today when we have access to a lot of information there several myths that people believe. In this article, we will see in detail the biggest myths about loans.
You need a high credit score
Having a high credit score is definitely a huge asset while applying for the loans as it increases the possibility of loan approval. The general belief that people have is that, if the individual is not having high credit score he or she will get the loans. That is actually not true. There are chances that one can get a loan even if they have a low credit score. But they need to pay high-interest rate when compared to ones that good credit score.
Only one loan at a time
Even though it is a myth, it is actually good to have just one loan at a time. But it is not a rule that one should have only one loan at a time. One can apply for more than one loan at the same time. If the banks feel that you are capable enough to repay them, there are good possibilities that you get a loan. But you need to understand the fact that every parameter that the bank considers should be in your favor which includes credit score, debt to income ratio and so on.
Personal loans have high interest
If you are speaking on the general grounds, yes it is true. Personal loans have a higher interest rate when compared to the rest of the loans. But there are possibilities that personal loans can have a lower interest rate. It depends on a lot of factors. People think that having a good credit score and having a steady income will contribute to the loan approval process. But the truth is that they can also help you in reducing the interest rate. There are possibilities that you can get a personal loan of 10.99% interest.
Personal loans affect your credit history
The general perception that people have is that taking personal loans will have a negative impact on the credit history. The truth is that it will not have any kind of negative impact on the credit history if the payments are made on time and if there are no dues. On the contrary, if everything is done perfectly, it will actually contribute that person by increasing the credit score which will be of great help while applying for loans in the future.