Personal Loans are often misunderstood. Many people, especially first-time borrowers, have doubts that may prevent them from reaping the benefits of a Personal Loan. We’ll clear up the common misconceptions.
Myth: Personal Loans Are Only for People Who Are Employed
If you’re applying on your own, employment is required because the lender needs to know you can pay back the loan. However, it’s not an absolute requirement.
For example, if you were temporarily laid off, you may still be eligible. And if you recently lost your job, you could still get a loan by applying with an employed co-borrower.
Make sure to talk to your lender about your options.
Myth: It’s Difficult to Apply for a Personal Loan
Some people think Personal Loan applications are tedious and time-consuming. In fact, Personal Loans often require less documentation than most other types of loans, and the process is fairly straightforward.
Want to ensure it goes smoothly? Make sure you have all the documents and information when you’re ready to apply. Here’s what you need to apply.
Myth: Getting Approved for a Personal Loan Takes a Long Time
A Personal Loan is actually one of the best options when you need money quickly. For example, at Connexus, most approved borrowers are approved within one business day, and they typically receive their money in less than a week.
Myth: A Personal Loan Can Only Be Used for Personal Expenses
You don’t have to use the money for personal expenses. While it’s a great way to accomplish personal goals, like consolidating credit card debt or paying for a vacation, a Personal Loan can be used for nearly anything. Many people use the money for quick home repairs, wedding expenses, and more.
Myth: To Get a Personal Loan, You Must Have a Stellar Credit Score
A good credit score can get you a better rate, but people with lower credit scores are often eligible for a Personal Loan. If you’re turned down, it’s probably due to a large amount of outstanding debt or a lack of income to cover the monthly payments. Here are some easy ways to improve your credit score.
Myth: Personal Loans Require Collateral
While secured personal loans that require collateral are available, they’re not as common as unsecured loans that require no collateral. Most lenders look at things like your income level, credit history, and credit score when making a decision on a loan application.
Myth: Personal Loans Trap a Person in Debt for a Long Time
The truth is, many lenders offer flexible payment options that allow borrowers to repay the debt in about one to five years. See our rates and terms.
Myth: It Doesn’t Matter Where You Take Out Your Loan
There are many different credit unions, banks, and online lenders that offer Personal Loans, so shop around and find a lender that’s right for you. You want low rates, personalized service, and transparency of information.
Once you find a trustworthy lender, you can confidently get a loan to help you reach your financial goals. (But don’t opt for a payday loan.)