Opting for a personal loan helps to cover both planned and unplanned expenses. However, it can lead to poor decisions when you believe certain misconceptions related to credit scores, interest rates, approval, and repayment. This is why it is necessary to compare the loan terms, check eligibility, learn about the applicable charges, and choose an affordable EMI.
Introduction
Considered the hub of commerce, maritime, and technology, Kochi is a city in Kerala which is best known for its software engineers, healthcare specialists, and retail entrepreneurs. Since the city has a high literacy rate and is full of an ambitious workforce, there are common myths that are believed by many borrowers that stop them from applying for a personal loan Kochi.
Due to some rumours and misconceptions, there are many individuals who cannot apply for credit and face issues covering their emergency medical costs, home renovations, and other expenses. But the matter of fact is, online borrowing has replaced traditional borrowing and made application convenient even for first-timers.
Here are some of the common misconceptions related to personal loans, along with the facts, so you can apply without any hesitation.
Myth 1: You Need a Perfect Credit Score to Get a Personal Loan
Fact: While a strong credit score (more than 750) helps you get a loan at lower rates and favorable terms, and improves your chances of quick approvals, you may also get credit with a considerably lower score. It may affect your terms of loan, interest rate and approval time, but there are chances to get a loan at a lower score.
Other than evaluating credit score and profile, there are certain factors evaluated by lenders to learn about the applicantโs financial profile, like the history of credit with a record of paying EMIs on time, monthly income, employment stability, and your existing debts and what percentage they take of your income.
Myth 2: Personal Loans Are Always Expensive
Fact: Depending on the interest rate charged, tenure of repayment, fees charged, and your financial profile, the cost of personal loan is evaluated. When someone has a lower EMI, it doesnโt always mean that the loan is cheaper; it can also mean that the tenure is longer, which means they are paying higher interest.
It is mandatory for borrowers to always check the applicable interest rate, additional charges, interest payable during the entire scheduled tenure, and the late payment charges and conditions before accepting any loan offer.
Myth 3: Applying for a Personal Loan Guarantees Approval
Fact: Lenders do not guarantee approval of every application as it depends on the eligibility checks, verification of the documents, and assessment of the repayment capacity of the borrowers.
Even when the loan application is online, the applicants are required to submit basic documentation to prove identity, address, income, and bank statements. The loan application gets cancelled if the applicant fails to provide basic documentation.
So make sure you review the eligibility criteria and be prepared with the necessary documents before applying for a personal loan Kochi.
Myth 4: You Can Use a Personal Loan Only for Emergencies
Fact: While many individuals choose to apply for a personal loan only when they are stuck in an emergency, as per the terms of the lenders, the loan funds can be used for any planned and unplanned expenses.
Urgent home improvements, education expenses, medical costs, debt consolidation, maintaining cash flow, and travel requirements are some of the common reasons why people choose to apply for a personal or unsecured loan.
Myth 5: A Longer Repayment Tenure Is Always Better
Fact: While your EMIs may become lower when you choose a longer repayment tenure, it also comes with paying higher interest over the time period. And choosing a shorter tenure will decrease interest payments, but increase the EMIs.
When you are aiming to preserve your monthly cash flow and manage the total repayments, consider opting for a longer tenure. Calculate an estimated EMI using an online loan calculator by Finnable and choose the right tenure by comparing different offers.
How Can You Borrow More Responsibly?
Borrowing and managing a personal loan is not as challenging as it sounds. Here are some smart tips to keep in mind before making an application:
- Evaluate your budget by calculating your disposable income, existing financial obligations, and recurring expenses.
- Assess the sum you actually need and donโt go for what the lender is offering.
- Compare different offers provided by the lenders and choose the one that best suits you.
- Update your documents and make sure that details are consistent.
Conclusion
When applying for a personal loan Kochi, it helps to avoid common mistakes and helps make good borrowing decisions when you learn about the myths and facts. Make sure the entire offer fits within your budget by checking the eligibility, comparing lenders and opting for the right tenure.
Finnable is a trusted platform that offers a personal loan at competitive rates and allows users to choose repayment tenures and get quick disbursements. Use the tools offered by the platform and make sure you make seamless borrowing decisions.
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