8 Myths Indians Have About Personal Loans

2. Bad credit personal loans charge unfair interest rates

After knowing about bad credit personal loans, most people immediately think that these loans must have unfair or unreasonably high interest rates. This may be true, but when you deal with legitimate financial institutions, it is definitely not.

The rates may be higher compared to those of regular personal loans but this is only because there is more risk involved in lending loan to a person with bad credit history. It is only reasonable for the interest rate to go higher since the risk of failure for timely repayment is higher as well.

3. Loans will never help you with your debts

People who have several minor debts can actually benefit from personal loans. Instead of paying many different debts with many different interest rates, they can pay them all off with one loan with one interest rate.

This may not lower your debt, but it will pay off all your debts instantly and consequently lower the total amount you pay in interest.

4. Bad credit personal loans require collateral

The need to pledge your most valuable assets seems to be the key reason for few people to stay away from land, but not all loans require this. Bad credit personal loans certainly do not require this, unless specified by the lending company. Only secured loans require collateral.