These 6 biggest myths are spread around the name of personal loans. If you believe them, then know the truth!

These days, personal loans are an easy way to meet immediate financial needs. However, many misconceptions are prevalent about them. For example, that only salaried individuals can take out loans or that it's impossible to get a loan with a low credit score. Here, learn about 6 major myths and their truth so you can make informed decisions without fear.

In today's times, when you suddenly need money, a personal loan can be a great relief. Whether it's wedding expenses, a medical emergency, home repairs, or funding your children's education, personal loans have become an easy solution for all these needs. However, some misconceptions about personal loans persist, which make people hesitant to take them out. Here, learn the truth about 6 common misconceptions.

Myth 1: Only salaried individuals can get personal loans.

Reality: This is a huge misconception. Personal loans aren't just for salaried individuals. Self-employed professionals, business owners, startup owners, and even pensioners can avail of personal loans. Even if you're not salaried, you still need to demonstrate a stable income to qualify for a loan. Lenders examine factors like your stable income, credit score, and employment type before granting a personal loan.

Myth 2: A low credit score will result in loan rejection.

Reality: It's true that those with high credit scores can easily obtain loans at lower interest rates. But that doesn't mean you won't be eligible for a personal loan if you have a slightly lower credit score. Lenders consider several other factors, including your age, job stability, and past payment history, in addition to your credit score, when granting a personal loan.

Myth 3: Personal loan interest rates are very high

Reality: People have the misconception that personal loans charge very high interest rates. This is not entirely true. Personal loan interest rates typically range between 10 and 15 percent per annum. However, if someone has a low credit score or has been late in paying EMIs on a previous loan, the interest rate may be slightly higher.

Myth 4: If you already have an existing loan, you won't be able to get another one.

Reality: Many people believe that if they already have an existing loan, they won't be able to get another personal loan. This is also not true. Lenders do check whether you can repay the new loan compared to your total income and the EMIs on the existing loan. If your repayment capacity is good, you can get a second loan.

Myth 5: Personal loans are only for personal expenses

Reality: Many people think that personal loans are only for personal needs such as weddings, vacations, or shopping. The reality is that you can use a personal loan for a variety of needs, such as medical emergencies, home renovations, children's education, or even starting a small business.

Myth 6: Taking out a personal loan is always a bad decision

Reality: It depends on why and how you're taking out the loan. A personal loan is a financial tool. If you misuse it, such as taking out a loan for unnecessary expenses, it will cause you harm. However, if you use it correctly for important work or investment, it can prove to be very beneficial.