With fast approval, minimal documentation, no guarantor requirement, and no limitations on end use of the finance amount, a personal loan can be extremely helpful for meeting your various monetary needs. Be it your home renovation, higher education, foreign trip, medical expenses, consumer finance can prove to be a savior at times since it gives liquidity within a very short span of time and without too much hassle.
However, personal loans are often misunderstood. Most of the folks, especially newbie borrowers have several misconceptions about consumer finances which prevent them from reaping the PL benefits. And the worst thing is that people seem to ignore these misconceptions. Lack of knowledge on the customer part can also play a major part in the creation of such misconceptions.
If you are also one of them who want to apply for consumer finance but is afraid to take the next move due to such misconceptions then don’t worry, we have got it all covered for you.
Here are some common myths about personal loans and the truth behind them.
Myth #1: Personal Loan Can Be Availed By the Banks Only
The most common misconceptions about Personal Loan is that a lot of people assume that only banks offer personal loans in UAE for expats and UAE Nationals. However, banks are not only the lenders but there are few digital lenders and non-banking financial companies (NBFCs) that also offer consumer finances. In several instances where banks reject a loan applicant’s Loan application, digital lenders and NBFCs are willing to sanction a loan since they have the flexible eligibility criteria when compared to those banks.
Myth #2: Only Salaried Individuals Are Eligible for Consumer Finance
This is commonly believed that only those applicants who have a regular source of income can apply for PL. However, self-employed individuals and businessmen are also eligible for consumer finance and the approval of finance amount is based on the credit’s report and repayment capacity. But please note that the loan amount that is sanctioned might vary.
Myth #3: You Can’t Opt for Personal Loan with a Low Credit Score
A low credit score can definitely affect the chances of the approval of your loan application but there is no guarantee that it leads to loan rejection. While an applicant’s credit history is one of the primary factors that lender consider for determining their Personal Loan eligibility, there are several other factors that take precedence over a poor credit rating. These factors include the applicant’s monthly income and their repayment ability.
Some of the banks and financial institutions offer a personal loan in UAE for expats and UAE Nationals even if the applicant’s credit rating is low. However, it should be noted that the interest rate on PL charged for people with a poor credit rating tends to be higher in comparison of the people with a good credit rating.
Myth #4: Consumer Finances Are Offered At a Very High Rate of Interest
Because consumer loans do not require any guarantor or collateral, it is commonly believed that they are offered at a very high rate of interest. But the interest rate solely depends on the applicant’s credit rating as well as their ability to make the loan repayment. Individuals who have a poor credit score and low repayment ability then the lender will likely to offer them a high interest rate on a personal loan. And if you have a good credit score and repayment records then you can avail consumer finance at an attractive rate of interest. In any case, Personal Loan is at least cheaper than other borrowing options such as credit cards.
Myth #5: Consumer Loans Have Long Processing Times and Tedious Application Procedures
Many people believe that the processing time for personal finance application is very lengthy and it also requires a lot of documentation. This may have been true several years ago but things have been changed in recent years. The complete procedure of loan application, approval, and disbursal of the amount into your bank account can be done as little as 48 hours only especially if you apply online. In fact, few of the lenders offer pre-approved & instant personal loan in UAE for expats and UAE Nationals which means that you can have the loan disbursed in your bank account within a few minutes of submitting the loan application.
Myth #6: You Can’t Apply For PL If You Already Have an Existing Loan
Many individuals believe that they can’t opt for personal finance if they already have an existing loan. Well, this is a myth. You are eligible to apply for multiple loans and the same criteria are applied to offering a second Personal loan as it is for the first one. Lenders accept loan application depending on the applicant’s monthly income and repayment capacity. So, even, if you have existing finances at the time of applying for another one, your loan application might get accepted if your ability to repay finance amount seems to be competent to the bank or financial institution.
Wrapping it Up
All of these are some of the most common misconceptions that people have in their mind about personal loans. So, discard them from your mind and opt for the one if you are going through the financial crisis. Because it is the one easiest and affordable way to meet your various monetary needs. You can compare the personal loan in UAE for expats and UAE Nationals offered by the several banks and financial institutions and apply for it without giving a second thought.
