Personal Loans Myths You Should Stop Believing Today
A personal loan is an excellent option when a larger sum of money is necessary for making a significant purchase, consolidating debt, and helping you gain better control of your finances. While this financial product is useful, there are many myths and misconceptions that surround getting a personal loan. Listening to these myths may cause you to pay too much for your financing and may generally cause you to mismanage your debt in the long run.
What Do You Truly Know About Personal Loans?
If you are thinking about getting a personal loan, it is vital that you stop believing in these misconceptions before you apply. If you have already heard some of these myths and are now a little confused as to what to believe, this blog post will help set the record straight.
Myth #1 - You Need to Have Excellent Credit
Personal loans are great loan products because they are highly customizable. The amount, interest rate, and loan term can be flexible, depending on the lender. There are many different types of personal loans that are made for different credit grades. If you have really good credit, you may be able to qualify for lower interest rates. Asking a loan officer will be the best way to know which type of loan you qualify for.
Myth #2 - Interest Rates Are Too High
Another myth that you have to stop believing is that the interest rates for personal loans are extremely high. There is an explanation for a rate higher than many other loan types—personal loans are unsecured. Unlike auto loans or home equity loans, lenders only rely on your willingness to pay as their collateral. This is the reason why personal loans tend to have higher interest rates. That said, they are not unattainably expensive and not meant to be a long-term financial instrument—just a flexible option to take advantage of when it offers more advantages than costs.
Myth #3 - It’s Okay Not to Pay an Unsecured Loan
Many people think that since personal loans are not secured, it is okay to blow them off. This is an unwise mistake that may cost you later on. Lenders will have their own way of seeking justice if you choose to ignore your payments. They may use their own collection agents or hire a third-party collection agency, or they will sue you. Regardless, it is not a good idea to ignore your personal loan repayments.
Myth #4 - The Process Is Difficult and Time-Consuming
The notion that personal loans are tedious and difficult to attain is another common misconception. In truth, personal loans have the easiest application process that do not require too much documentation and paperwork. You can get these loans online, through a lending agency, at a bank and even through your mobile device!
Myth #5 - Getting a Personal Loan May Hurt Your Credit Score
This is a myth that has some truth to it because when you apply for a personal loan, the lender may do a credit check. This may lower your credit score by a few points initially. However, your score will normalize after a while. It will even rise higher if you are able to always pay on time.
These are only some of the myths that are currently circulating and causing confusion for people who may want to apply for a personal loan. Although this is not an all-inclusive list as to the myths that are going around, this blog aims to help you go into the application process with a level head and an open mind.
If you need to apply for a personal loan, Gadsden Finance Company is here for you! We
believe you can’t always judge a book by its cover when it comes to past credit, and we will
never turn any applicant away. We make straightforward, fair, honest loans and are happy to
answer all questions or inquiries. We are the best place to get personal loans in Gadsden, AL! Apply with us today!