With more and more banks providing loan for practically any type of expenses like Home Loan, Automobile Loan, Medical Loan, Education Loan, Business Loan, etc. fulfilling your own and family members’ needs and desires is a dream that can now be realised
Personal Loan is another category of loan provided by banks however with the following myths among the people in general:-
- Long Processing Time: On the contrary with the submission of the required documents and meeting the eligibility criteria laid down the banks provide quick approval for personal loan.
- One can get Personal Loan only from the bank in which one holds an account: This is not true. Any bank could give personal loan depending on the loan seekers’ good CIBIL Score and meeting the eligibility criteria.
- Interest rates and other Terms and Conditions of Personal Loan given by various banks, very difficult to compare: Online information regarding these factors is now available over various web sites, specifically designed to disseminate information on various banking products including personal loans thus enabling taking appropriate decision before availing personal loan from banks.
- Only Salaried Indian Citizens and not NRIs or Self Employed individual’s can avail of Personal Loan: Apart from Salaried persons those who are self employed and NRIs can also get Personal Loan if they have the required documents and meet the criteria laid down by the banks.
- Interest on Personal Loan as Compared to all other types of loan is high: Compared to interest on credit card loan, the rate of interest on personal loans is lower.
- Income Tax advantage not enjoyed on Personal Loan: this not true as per Section 24 of the income tax Rules, income tax benefit on personal loan under this section can be claimed, when the loan is used for purchasing property, repairing, refurbishing or renovating property, subject to an overall interest benefitof maximum 1.5 lakhs as exemption on income tax.
- If the CIBIL Score is below the desired level you are not entitled for a Personal Loan: Some Financial Institutions may provide loan even otherwise considering other factors regarding capability of repaying the loan.
- Taking a Personal Loan only adds up to your other debt servicing liability if you have simultaneous debts to pay: at times one could repay off other debts using the Personal Loan and left with only the interest on personal loan to be repaid.
- You should apply for personal loan with more than one banks this would increasing your chance of getting the loan from at least one of the banks: Applying for Personal Loans simultaneously with more than one bank reduces your chance of getting loan as yourrecords are sent to the Credit Information Bureau (India) Ltd. by registered member banks on a periodic basis and this could decrease your score for you being apparently seen as a person seeking personal loan from various banks.
- Any amount can be applied for as Personal Loan: in the first place the amount approved would depend on your income proof submitted by you and other eligibility criteria. Moreover it is always better to exercise utmost prudence while applying for a certain loan amount since the repayment of loan needs to be given prime consideration. Defaulting in repayment or not being able to timely repay the loan would lead to a lower CIBIL Score thus lowering your credibility and eliminating your chance of availing further loans when required.
The above information is based on a generalized collation of information from available sources over the public domain. You are however advised to go through the detailed information provided by different banks before deciding any further.