A Personal Loan is a simple & effective way of securing finance for Personal needs. Many apprehensions & misunderstandings about the product leave applicants confused. Whether a first-time loan seeker or having faced issues when applying,the following information is provided for our customers to help distinguish Myths from Facts.
Myth- a Personal Loan is a Secure Loan. The applicant needs to secure an asset to obtain funds via a Personal Loan.
Fact- A Personal Loan is an unsecured loan marketed by leading Banks & NBFCs. It is characterized explicitly as unsecure the finance required by the loan seeker is forwarded solely based on the profile, CIBIL SCORE and supporting documents.
The applicant taking the loan does not have to mortgage an asset in the form of property, jewelry, or a fixed deposit to secure funds.
Myth- The rate of interest for a Personal Loan is liable to change at any time during the tenure.
Fact- The rate of Interest for a Personal Loan is fixed on the approval of the requestat the time of disbursal it is applied per the policy of the particular Bank/NBFC providing the loan.
The Personal Loan agreement signed by the applicant clearly states the terms and the interest rate to be charged.
The interest rate charged on the Personal Loan remains constant for the entire tenure of the loan the EMI is calculated according to the repayment tenure from 12 to 72 months and is deducted regularly from the Bank account.
Myth- Acquiring a Personal Loan is a long & tedious process.
Fact- A Personal Loan is a fast & convenient way of securing funds for an urgent financial need. An applicant can secure funds within 72 hours of applying. Following the proper guidelines, providing genuine details, authentic details & having a good credit history are important factors that contribute to the smooth processing of a Personal Loan. With the introduction of online processing for Personal Loans, applicants can now apply digitally and receivefunds in record time.
Myth – The Rate of Interest for a Personal Loan is very high.
Fact- Personal Loan, unsecure funding, is provided at a higher rate than secure loans such as home loan. However, it is still the cheapest way to secure funds for personal needs.
The interest rate charged for a Personal Loan is from 11% to 18% @ reducing balance, and the fixed rate amounts to 6% to 12% per annum.
Therefore, getting money without any security from the Bank via a Personal Loan is cheaper & easier than borrowing from private agencies or having a mortgage on an asset or jewelry.
Myth –The CIBIL data (records of Credit Bureau of India Ltd) is the proper& final authority on Creditworthiness.
Fact- The CIBIL is a private agency that records all financial data.All major financial institutions, Banks & NBFCs submit details of all credit transactions of their customers to CIBIL.
The CIBIL, in turn, provides the Banks & Credit Institutions with the records of an individual’s credit history whenever required or when an individual applies for financial assistance.
Screening the applicant’s credit history gives the Lending institution the confidence to forward further credit. If the credit history is flawed, the Loan application will get rejected. While some Banks are willing to override a CIBIL issue, other lenders may like to go by the book &deny the Personal Loan request.
Knowing an applicant’s behavior with credit is always advantageous before beginning a credit relationship & accessing the credit records. Still, it is essential to remember that the CIBIL records are not infallible.
Maintaining an accurate record of the working class,with similar names, dates of birth & other similar characteristics, is a considerable challenge. In addition, a financial institution may erroneously upload incorrect data about a client and technical glitches could also mar records.
Lending institutions overlook age-old defaults if the applicant has over come a lousy patch with a loss of employment or illness and is now earning a regular income paid all debts and restructured finances.
We at yourloanadvisors.com help our customers to improve their CIBIL and amend or correct a wrong entry to clear the CIBIL mandate.
Myth–A CIBIL Score or a previous Credit record is mandatory to secure a Personal Loan.
Fact- The Personal Loan mandate for various lending institutions is governed by individual policy. Some Banks & NBFCs provide Personal Loans to individuals with a proven credit record. In contrast, others may consider it a worthy proposition to give Personal Loans to applicants who have never availed of credit before.
Loan seekers can apply to a credit institution that forwards Personal Loans to fresh applicants. However for first-time borrowers, the loan amount may be conservative; it is worth the while to secure a Personal Loan & build a credit history.
Myth- All, the Personal Loan lenders, are similar; a rejection from one means a Blanket rejection.
Fact- No need to despair if a rejection has been issued for a Personal Loan application.
There could be many reasons why a Personal Loan application is declined. For example, the applicant’s profile may not match the policy requirements the current employer may not feature in the approved list of companies or it could be a simple verification issue.
The Personal Loan process is speedy, so there is always room for an error in operation most banks are willing to reassess the decision if the customer requests a relook.
Unless the applicant has been a chronic defaulter in former credit dealings or cannot afford to pay the monthly in installments or the Loan, the need for a Personal Loan can be fulfilled.
Myth- Money needs to be advanced for processing when applying for a Personal Loan.
Fact- No funds are to be advanced when applying for a Personal Loan, and the processing fees or file charges are deducted from the loan amount approved on disbursal of the loan.
The Processing fees are from nil to 2% of the loan amount, per the policy of the lender and loan amount approved.In addition, the applicant is intimated about the charges applicable and other terms on signing the loan agreement. Any ask for funds or when applying for a Personal Loan should be reported as it amounts to fraud.
We at yourloanadvisors.com have a decade of experience helping our esteemed customers to clear doubts. We assist and guide you to the best of our abilities and go to all lengths to ensure your Loan experience is successful and hassle-free.
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