Perhaps you are going on an impromptu holiday or renovating your home that you’ve been planning for months. A personal loan is ideal for getting the funds right away for these expenses.
But in Australia, there are a lot of myths about taking out personal loans. If you believe such misconceptions, it is time to get in touch with alex.bank. Speak to the experts who can dispel your doubts and explain how to get easy approval.
Here’s looking at seven such beliefs perpetuating people’s mindsets:
1. Personal Loans Can Adversely Impact Your Credit Score
Firstly, borrowing money never in itself can affect your credit rating. In fact, your loan application approval and subsequent payments in a timely fashion can only improve it. However, it is a different matter if you incur late payment penalties or miss a payment.
If you apply for several loans simultaneously, since loan approval processes involve hard credit checks, it can reflect in your credit history. Taking out a new loan when you already have one may result in higher interest rates.
2. All Personal Loans Are of the Same Kind
Personal loans are indeed preferable when there is an emergency, but they vary with the situation. For instance, a personal loan for the purpose of home improvement differs from a debt consolidation loan.
Furthermore, the rates, repayment period, and loan amount limits may vary with each lender. Hence, do your research before sending in your loan application to some random bank. Also, choosing a multiple award recipient can help.
Such lenders prioritize your needs and tailor the solutions with lower rates and zero establishment fees. For instance, personal loan rates at alex.bank start from 4.99%. You can borrow a maximum of $30,000, which you can pay back in up to sixty months.
3. You Need to Show a Collateral or Security
Customized personal loans for every emergency guarantee approval for almost anyone. Unsecured personal loans don’t need you to have an asset as collateral. If you are a citizen of this country or a permanent resident with a regular income, you can qualify.
Other requirements are that you should be 18 or older and never file for bankruptcy. Having an excellent credit score can also get you competitive rates. With such straightforward and easy-to-understand rules, there is no scope for confusion.
4. If You Don’t Get a Loan at Your Bank, There is No Other Option
If the current bank you have been with for years hasn’t approved your loan, don’t despair. There are other opportunities out there. Banks usually have strict regulations and restrictions; they may not be ideal for a personalized loan.
Approach specialized banks that offer flexible personal loans of various kinds. Such banking restriction authorities adhere to responsible lending conduct obligations and ASIC regulations. In short, finding an Australian Credit License is crucial so that you can negotiate better rates.
5. Guaranteed Better Deals with Multiple Loan Applications at a Time
Some people like to compare different lenders to choose the best offer. However, applying for more than one personal loan at one time can work against you. As mentioned earlier, the hard credit check performed by the lender shows up in the credit history.
As a result, you have a lowered credit rate. Other lenders can see all your applications and come to a conclusion that you have financial troubles. They perceive it as a potential red flag and might reject the application.
Maximize your chances of loan approvals by paying off existing dues via debt consolidation. Maintain a steady income and plan for an emergency fund with your savings. Find trustworthy lenders through credible sources and get a suitable deal.
6. Personal Loan Rates Are Too High
This myth is one of those opinions that people like to share without any valid proof. While some lenders charge exorbitant rates per someone’s situation, it is wise to steer clear of those.
Typically, personal loan rates depend on various factors like repayment period, your credit history, etc. In most cases, the rates are lower than other financing options. It is also why personal loans are the most preferred method for debt consolidation.
7. Getting a Personal Loan Is a Time-Consuming Process
These days, everything is done digitally, and personal loan applications and approvals are the same. Credit providers utilize an easy interface on their websites, which makes it convenient to navigate for applicants. Get an estimate by setting your term length, loan amount, and repayment frequency.
After a credit assessment from the bank’s end, you have a personalized solution for your specific needs. You are most likely to receive the funds within hours of submitting your details on the website.
Finally
Remember that everybody has unique needs, and what worked for your friend may not be ideal for you. Having a clear undertaking of how personal loans work can help you prevent making a bad decision.
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