Having that need for generating funds can often be challenging especially when the need for it is driven by urgency. Personal loans make the best way to address this problem. Once your personal loans have been processed, you are expected to receive the proceeds within a week after your application. These proceeds can be used for any purpose that you may have.
Personal loans may sometimes have a bad reputation because of the borrower falling deep into debt. This often arises because of improper management of the loan. Having a disciplined payment scheme and proper approach can help you avoid this trap. Here are a few of those misconceptions on personal loan that you can consider when applying for one.
Banks are the Best Places to Get a Personal Loan
At this age, banks offer a variety of services that cater for the need of a client regarding financials. This includes providing loans. But with the rise and growth of the financial industry, these services are no longer restricted to banks unlike how it was a few decades ago. There are licensed lenders who are granted by the government to operate and give better offers. These licensed lenders can even offer additional services that a bank does not offer such as financial planning and management.
Personal Loan are Cheaper than Credit Cards
This is not entirely true. Personal loans have varied interest rates depending on the loan. If your personal loan is applied for a short period of time, the effective interest rate applied to your loan may end up higher than the interest your credit cards offer. On the other hand, if you revolve your credit in your credit card for a long period of time, those interest payments may prove to be more expensive than getting a personal loan.
You are Automatically Rejected with Bad Credit Score
It is true that credit score plays a big role in getting your personal loans approved but it isn’t the sole factor for approval. Nowadays, it is much important for a licensed lender or a bank to qualify the borrower and his capacity to pay. With a low credit score, the lender may implement stricter payment schemes or higher interest rates to recover the loan amount as early as possible.