When it comes to loans, misinformation can be costly. Whether you’re applying for your first loan or have taken many before, it’s important to separate fact from fiction.

In this blog, we’ll bust 7 common myths about loans that might be holding you back from making smart financial decisions.

1. Only People With High Income Can Get Loans

Reality: While income plays a role in loan eligibility, it’s not the only factor. Lenders also consider:

• Your credit score

• Existing EMIs

• Job stability

• Debt-to-income ratio

Even people with moderate income can get approved if they meet other criteria.

2. A Low Credit Score Means Guaranteed Rejection

Reality: While a high CIBIL score improves your chances, some lenders provide loans to people with lower scores, especially if:

• You have stable income

• You offer collateral

• You apply with a co-applicant or guarantor

You may have to pay a slightly higher interest rate, but approval is still possible.

3. You Can’t Prepay Your Loan Without Penalty

Reality: Many modern lenders offer zero or low foreclosure and prepayment charges, especially on personal loans. Even home and business loans may have flexible prepayment terms.

Always read the loan agreement or ask the lender directly.

4. The Lowest Interest Rate Means the Best Loan

Reality: Interest rate is important—but not the only cost involved. A loan with the lowest interest rate may have:

• High processing fees

• Hidden charges

• Strict foreclosure rules

Always look at the total cost of borrowing, not just the interest rate.

5. Online Lenders Aren’t Safe

Reality: As long as you’re dealing with RBI-registered NBFCs or banks, online lenders are completely legitimate. In fact, many offer:

• Faster approvals

• Paperless processing

• Competitive rates

Just avoid unregistered loan apps or unknown platforms.

6. All Loans Require Collateral

Reality: Unsecured loans like personal loans, business loans, and some education loans do not require any collateral. You can borrow based on:

• Your income

• Credit score

• Loan history

Collateral is only required for secured loans like home loans, gold loans, and loan against property.

7. Getting a Loan Lowers Your Credit Score Permanently

Reality: A loan enquiry may slightly impact your score, but repaying the loan on time actually improves it over time. Responsible borrowing shows lenders that you’re creditworthy.

So instead of hurting your credit, a well-managed loan can boost it!

Final Thoughts

Loan myths often stop people from making the right financial choices. Understanding the truth helps you borrow with confidence, avoid traps, and get the best deals.

Need Honest Loan Advice? We’re Here for You.

At [Your Company Name], we believe in transparency and education. Our experts will guide you through the process—no hidden terms, no myths, just clear answers.

Talk to us today for a free consultation or check your loan eligibility instantly!