Truthfully, an unsecured loan can be a very useful tool for any loan purpose, including financing a big expense just like a home renovation or consolidating debt.
However, there is a lot of misinformation out there about these financial products. With that in mind, we're going to set the record straight around the three common personal bank loan myths below. Keep reading to learn what you ought to know before applying for just one of these loans.
3 personal bank loan myths you need to ignore
- Personal loans are an expensive method to borrow money
- You must have a good credit score to obtain a personal loan
- Applying for multiple loans increases the time of approval
Myth 1: Personal loans are a costly way to borrow money
While it's true that banking institutions do charge interest in exchange for borrowing loan funds, personal loans can have some of the lowest rates available. According to the most recent data in the Fed, the average apr (APR) on a personal loan is simply 9%, compared to the average rate on the charge card, which is 14%.
Still, the eye rate that you're given can vary by lender so it's smart to look around and get quotes from multiple lenders before you apply for a loan. In most cases, it also depends heavily around the strength of your credit profile. For the most part, those with good or excellent credit scores can get to get the best loan rate.
If you believe an unsecured loan may be the right fit for you, make use of an online marketplace like PayPasser to view your personal loan options.
Myth 2: You'll want a good credit score to get a personal loan
However, that•s not to say that there aren't personal bank loan options out there for those with a less-than-perfect credit score. Fortunately, poor credit loans do exist. You may have to jump through additional hoops in order to increase your likelihood of loan approval. In particular, a loan company will often request you to have a cosigner or to offer a form collateral in exchange for better repayment terms.
On the other hand, if your goal would be to keep your monthly payments to a minimum, you may want to focus on reducing your credit debt before you apply for any personal loan. Since credit scoring plays this type of big role within the approval process, it seems sensible to get your score into the best shape possible before completing a credit card applicatoin.
Alternatively, you may even have the ability to secure a much better rate should you choose a shorter repayment term or for smaller loan amounts.
To obtain a better concept of how much to pay, use PayPasser's unsecured loans calculator or go to the web site to obtain a feeling of the private loan rates provided to you.
Myth 3: Applying for multiple loans increases your chance of approval
Lastly, many people mistakenly think that trying to get loans with multiple lenders at the same time will increase their likelihood of getting approval. Unfortunately, trying to get multiple credit loans at one time includes a high possibility of affecting your credit negatively.
In practice, lenders will pull your credit any time you obtain a loan and having a lot of inquiries on your credit history previously can hurt your credit score. Instead, it's a far greater idea to shop around until you find the lender that's the best fit for you personally after which apply for one loan at a time.
Choose PayPasser to obtain accessibility best personal loan rates on the market.
The bottom line
Hopefully, debunking these myths has given a better idea of what to anticipate when the time comes for you to apply for a personal bank loan of your.
However, for those who have more questions on this topic, a good thing to complete is always to consult an economic adviser. They are able to look at the specifics of your funds and give you individualized advice on the kind of personal bank loan that could be most suitable for you.
If you're prepared to begin, visit PayPasser to view your personal loan options and also to compare rates and lenders. Alternatively, you can also visit PayPasser to become put in touch with an experienced loan officer who can answer any questions you will probably have around the approval process.