You might have instances that you are hesitant to get a personal loan since it can get you drowning in debts. Believing that you will simply get a bad financial state. There are some who find that they can’t get this type of loan due to lack of collateral or they don’t have regular jobs. And there are a lot more beliefs that make personal loans having a bad reputation.

We’re going to debunk those misconceptions. Let’s uncover the truth behind the common myths about personal loans.  In the end, you will discover how it can be a life-saver during financial difficulties.

The Truth Behind Common Personal Loan Myths

Myth 1: I don’t have a chance to borrow since I have a low credit score.

The Truth: Even though you have a low credit score, you can still apply for a personal loan. Although your credit score matters especially when you want to apply from banks. But the truth is, you are still qualified depending on your annual income.

One of the best options you can do for now is just to take a lower loan amount and pay it on time.  This will improve your credit score, making your loanable amount higher in the future.

Remember, always aim to have a high credit score. With a higher score, you get to enjoy a higher principal amount at a much lower interest rate. So, be a responsible borrower.

Myth 2: If I have existing debt and rising expenses, a personal loan will lead me to a bad financial status.

The Truth: Have two types of loans – secured and unsecured personal loans. It can help you in financing your immediate expenses. Helping you also to get out of your high-interest debts.

To avoid having a bad financial state, always approach a licensed moneylender. They have competitive offers at a lower interest rate. And the important thing, they are regulated by law. Check over the list of licensed moneylenders here.

Myth 3: Applying for a personal loan is a hassle since I have to submit lots of forms and wait for a long approval time.

The Truth:  Some don’t bother to apply for a personal loan since it’s time-consuming. You will fill-in lots of forms. And you’ll wait for days for your loan approval. And now, these are just misconceptions.

Applying for a personal loan now means ‘convenience’. You can now apply online. Instant approval also exists where you can get it within the day or the next day. To claim this loan, all you have to do is adhere to the moneylender’s requirements.

Myth 4: I can’t borrow because I don’t have collateral.

The Truth: Personal loan is one of the easiest and convenient loans since it has an unsecured loan. With this type of loan, you don’t need to have collateral and even a guarantor.  You can borrow from $500 up to $100,000.

In reality, the type of personal loan that needs collateral is the secured one. You can either have your car or your home as collateral. But you’ll only provide collateral if you need an amount above $100,000.

Simply, you can still borrow even without collateral. Just remember to borrow to a licensed moneylender and be a responsible debtor.

Myth 5: I need to have an annual salary of at least $30,000.

The Truth: Having an annual income of at least $30,000 is true among most banks. This is one of their basic requirements. In reality, there are licensed moneylenders offering loans to income earners below $30,000. You can borrow funds even you are self-employed. This is to address the 8.4% market share of self-employed in Singapore’s workforce.

Since you’ve got a chance, remember to follow the requirements. And take note, with an income below $30,000 the amount to be borrowed is limited.

Myth 6 - Personal loans are only for people with financial problems

The Truth: This cannot be further from the truth as there are many Singaporeans who are doing just fine with their personal economy and they still choose to ask from personal loans. They do this for a bunch of different reasons, and they use those loans as financial strategies.

A very common use for this kind of loan is that people will ask for a loan to finance their vacations or to finance the purchase or a fairly valuable item or asset. Others also use personal loans to invest in ventures and projects.

Myth 7 – I should always get more than what I need

The Truth: This is a very common myth, but the truth is that a smart loan is one that only asks for the exact amount of money that is needed. This means that you need to forget about asking for loans that exceed your needs because the last thing you want to be doing is paying any extra amount of interest for the money you did not need in the first place.

Take the time to analyse your situation and ask for the exact amount of money that is going to solve your situation. This is the best way to ensure that you don’t end up paying more than you should on those interest rates.

Myth 8 – I’m in debt already so I do not need a personal loan

The Truth: Remember what we said earlier about loans not only being requested by people with financial problems. A personal loan should never be seen as debt, but instead, it should be seen as the perfect way for anyone to get out of debt and to finally get their financial situations back on track.

All you really need to do when you decide to get a personal loan is to evaluate what this is going to do for you and how you can make the most out of that loan for great results. It’s not debt if you assign that money to the right kind of purpose.

In Reality

The most important thing that everyone should do when it comes to personal loans has debunked these myths once and for all. Never forget that they are a great way for anyone to get rid of any kind of financial distress as long as they can handle the payments. There are many ways to ensure that your personal loans can make things much easier for you, but just learn when to request a personal loan and when to avoid one.

It’s very relevant and useful to do your homework on all of your options, so be patient and do plenty of research before you make any kind of decision. Even if you feel that you have any financial struggles, you have to keep calm and calculate your situation before you jump into any conclusions regarding the kind of loan that you are going to get.

Applying for a personal loan is easy. Most licensed moneylenders have flexible loan products to various types of income earners. As we exposed the truth behind those myths, we are hoping that you have seen the real value of personal loans. It’s a life-saver especially when you need immediate cash.

If you have any questions, don’t hesitate to ask. We at MoneyIQ, as a Premium Business Listing have a valuable page for personal loan helping you to understand this type of loan. With our platform, you have a smart way of getting competitive offers at a lower interest.

Published On: March 18th, 2020

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