Think of any crunch in life, and personal loans are the answer to bring you out of any odds. You can apply for a personal loan online for any crisis or need in life. Personal loans have remained one of the first resources for people facing unprecedented emergencies. With the world witnessing a massive pandemic outbreak, many things have gone topsy-turvy — from salary cuts and surging medical bills to inflation and plunging bank interest rates — driving common people to opt for personal loans.
The salary for many people in India has become insufficient to make ends meet or fulfill immediate financial requirements. Personal loan online has saved millions of people in India, thanks to loan disbursal companies. Unlike home, education, or car loans, a cash loan can be availed for any purpose, from buying holiday tickets to engagement rings. If you need to do home repairs, pay school fees, or finance your passion, apply for an instant personal loan and get a one-time cash flow credited directly to your account.
However, there are a few common misunderstandings that often deter applicants from considering a personal loan in dire need — leading to panic, confusion, and scepticism. Here we bust those myths, one by one.
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Common Myths About Personal Loan Online
Let’s check out some of the most prevalent myths about personal loans that will give you a crystal-clear picture the next time you face a financial need.
Myth 1: Only Banks Offer Personal Loans
One of the most pervasive myths is that personal loans can be availed only from traditional banks. In reality, many digital lenders and NBFCs offer quick and instant personal loans. Lenders like Buddy Loan have convenient policies with multiple lenders on their dashboard. The eligibility criteria for cash loans through such lending apps are far more flexible than the stringent requirements of banks. So, if your personal loan application from a bank is rejected, loan payment apps offer customised loan offerings with a significantly higher approval probability.
Myth 2: Only Salaried Individuals Qualify for Personal Loans
It is widely believed that only salaried employees — with stable, verifiable income via payslips — are eligible for personal loans. This is not true. In reality, anyone earning above a certain income threshold can apply. Loan disbursal apps like Buddy Loan have flexible eligibility criteria that accommodate various employment types. If you are a self-employed individual with a steady and regular income flow, you can easily apply for an instant personal loan. Lenders will evaluate your credit history, ongoing loan repayment status, and repayment capacity — your employment type is just one of many factors.
Also Read: Personal Loan for Proprietorship Company Employees
Myth 3: Personal Loans Have Sky-High Interest Rates
Many borrowers believe that personal loan interest rates are unaffordable. However, this is often not the case — especially with NBFCs and lending apps. They set interest rates based on your credit score and repayment capacity. Buddy Loan, for instance, offers personal loans starting at just 11.99% per annum. A strong credit history can bring your rate down even further.
Myth 4: Personal Loans Involve Long Processing Times
Gone are the days of tiresome approval processes, long queues, and follow-up visits to the bank. With modern lending apps, the entire process is digital, simple, and convenient — regardless of your physical location. You need only a PAN card, Aadhaar card, income proof, and proof of residence. From registration to disbursal, the entire personal loan application process now takes just a few minutes to a maximum of 48 hours.
Myth 5: You Cannot Apply for a Loan if You Already Have an Existing One
Many people believe they cannot apply for a cash loan while repaying an ongoing loan. This is not true. Your second loan is assessed in the same manner as your first — based on existing liabilities, income flow, and repayment capacity. Regardless of any ongoing loans, you can still apply for a personal loan online.
Myth 6: A Poor Credit Score Will Get Your Loan Rejected
A low credit score can impact loan approval but does not automatically mean rejection. Lenders also evaluate your income, age, document authenticity, and liabilities. Most lending apps assess your intention to repay, your repayment history, and your current repayment capacity alongside your credit score.
Also Read: 10 Best Tips for Successful Personal Loans
Myth 7: Personal Loans Cannot Be Prepaid
Several applicants believe that a personal loan amount cannot be repaid before the scheduled due date. This is a complete myth. Personal loans can be prepaid anytime after a minimum tenure period — during which regular EMIs must be paid. Once the minimum tenure is completed, you can foreclose the loan by paying the remaining amount in full. Some lenders like Buddy Loan do not charge any foreclosure fees, making prepayment even more convenient.
Myth 8: Personal Loans Can Only Be Used for Personal Purposes
Despite the name, personal loans can be used for virtually any purpose — repaying another loan, paying college fees, covering medical expenses, paying rent, purchasing assets, booking a vacation, or even starting a small business. There are almost no restrictions on how you use the funds.
Check: Personal Loan Trends
Myth 9: The Personal Loan Application Process Is Complex
Thanks to apps like Buddy Loan, applying for a personal loan online has become a cakewalk — far simpler than applying for a car or home loan. You can fill in your details and apply for a loan online from the comfort of your home in just a few minutes, whether you’re travelling, studying, or relaxing.
Myth 10: You Must Submit Hard Copies of Documents
In this digital age, you no longer need to visit a branch office to submit physical documents. Simply upload clear scanned copies or photos of your documents online. Ensure the images are legible and authentic to avoid delays in processing your loan application.
Myth 11: A Personal Loan Will Increase Your Debt Burden
While taking a personal loan alongside an existing one does add to your liabilities, there are smart ways to manage it. Options like loan refinancing, converting EMIs to a lower amount, or using a credit card strategically can help ease the burden effectively.
Myth 12: Personal Loans Require a Mortgage or Collateral
Unlike home, car, or education loans, personal loans are unsecured loans — meaning they require no collateral or mortgage. You only need to complete the documentation process, which itself has become largely digital and hassle-free.
Myth 13: You Need All Identity Documents — PAN, Passport, Voter ID, and Driving Licence
Many loan disbursal apps like Buddy Loan require only one valid identity document. You can submit any one — PAN card, Aadhaar card, Passport, Voter ID, or Driving Licence — as proof of identity when you apply for a personal loan online.
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Myth 14: Online Applications Risk a Data Breach
Reputable loan apps are legally obligated to protect your data. Apps like Buddy Loan do not share your personal information with any third party other than the verified lender. Millions of users trust these platforms daily, and your data remains safe and secure throughout the process.
Avail Loans From Popular Loan Apps
Now that you are clear about the common myths around personal loan online applications, always explore your options before approaching any lending company or NBFC. Ensure there are no hidden charges, verify that the app is trusted and authentic, and confirm that customer support is responsive. Always choose a lender that is fully transparent about the process.
Also Read: The Effect of Employment Status on Personal Loan Approval
Wrapping Up
If you ever face a misconception about personal loan online applications, revisit this page to clear your doubts. Buddy Loan’s customer support team is also available to assist you throughout the process. With flexible policies, multiple lenders on the dashboard, and customisable loan amounts, EMI, and tenure options, Buddy Loan makes personal loan applications truly hassle-free. Visit Buddy Loan’s website for more information.
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