Personal Loan Myths You Should Stop Believing
You’re planning a ₹15 lakh home renovation, but a friend claims, “Personal loans have sky-high interest rates!” Another insists, “Approval takes forever.” Are these claims true? Let’s uncover the reality behind these myths.
For instance, let’s calculate the EMI for a ₹15 lakh personal loan. If you borrow at an interest rate of 10% for five years, your EMI would be approximately ₹31,872. That’s manageable for most salaried professionals, right?
According to recent data, personal loans in India grew by 14.4% in 2024, reaching nearly ₹55.3 lakh crore. This growth indicates that many Indians find personal loans to be a viable financial option.
Let’s clear up some myths about personal loans to help you make better choices for your home renovation. Let’s find out more below.
- Personal Loans Have High-Interest Rates
Yes, personal loans have higher rates than secured loans like home loans. But they’re not unreasonable. For a ₹15 lakh personal loan, your rate depends on your credit score. If your score is above 750, many lenders offer rates starting at 9%.
Example:
If the rate is 9%, your total repayment after five years is ₹18,74,220. Compare this with a 15% rate, where the repayment jumps to ₹21,53,680. A strong credit score saves ₹2.8 lakh!
- Personal Loans Are Only for Emergencies
Who says? People use personal loans for travel, weddings, or consolidating debt. For instance:
- A wedding in India can cost ₹20-25 lakh. Taking a ₹15 lakh personal loan covers major expenses.
- Home improvement projects, like modular kitchens, often start at ₹5 lakh. Loans can spread the cost.
A personal loan isn’t just for emergencies; it’s for planned dreams, too!
- You Need a Perfect Credit Score to Get a Personal Loan
This myth is why many people don’t even apply. While a 750+ score helps, lenders consider other factors like income and employment stability.
Here’s a quick comparison of eligibility based on credit scores:
| Credit Score | Interest Rate | Loan Approval Odds | EMI for ₹15 Lakh (5 years) |
| 750+ | 9% | Very High | ₹31,150 |
| 700-749 | 11% | High | ₹32,656 |
| 650-699 | 13% | Moderate | ₹34,159 |
| Below 650 | 15% | Low | ₹35,745 |
Even a 650 score won’t automatically disqualify you!
- Applying for a Personal Loan Hurts Your Credit Score
People worry that enquiries will damage their credit. But this is temporary and minimal. In fact, timely repayments on loans can increase your score.
Tips to protect your score while borrowing:
- Don’t apply to too many lenders at once.
- Pre-check your eligibility on loan apps.
- Stick to your EMI deadlines.
Building credit is like building muscle—regular effort makes it stronger
- Personal Loans Have Hidden Charges
Good lenders are transparent. Yes, there are processing fees (1-3%), but that’s standard.
Supporting facts:
- Prepayment charges can be zero with many lenders.
- Always read the fine print on late payment penalties.
- Choose RBI-registered lenders to avoid scams.
Example: For a ₹15 lakh personal loan, a 2% processing fee means ₹30,000. If this sounds high, look for lenders offering discounts during festive seasons.
Personal Loans: Why They Get Approved Faster Today
Gone are the days when getting a personal loan meant long queues and endless waiting. Now, many online platforms offer instant loan approvals. Some even disburse the amount within 24 hours.
This speed is possible due to advanced technology. Lenders use AI to review documents quickly. E-KYC systems make identity verification fast and hassle-free.
To ensure a faster loan approval, keep all documents ready. These include bank statements and salary slips. Make sure your PAN is linked to your Aadhaar. Applying during working hours can also speed up the process.
Conclusion
So, are personal loans scary? Not if you understand the facts. The truth is, a ₹15 lakh personal loan can be your bridge to financial goals, whether it’s for a wedding, home improvement, or debt consolidation.
Here’s a question: Why let myths stop you when smarter decisions can save you money and time?
FAQs
Q1: How much EMI will I pay for a ₹15 lakh personal loan?
Your EMI depends on the interest rate and tenure. For 5 years at 10%, it’s ₹31,872.
Q2: Can I prepay my loan without penalties?
Yes, many lenders allow zero-cost prepayments after 12 months.
Q3: Do I need a co-applicant for a personal loan?
Not always. If you have a stable income, you don’t need one.
Q4: What is the maximum tenure for a personal loan?
Most lenders offer tenures up to 5 years, but some extend to 7 years.
