What if one day, you are driving to work, and suddenly, you get rear-ended. This accident puts you in the hospital for a few days, and you wind up with towering medical bills that you can’t pay off quickly enough. What will you do now?
This situation is where a personal loan can save the day. You can take out the appropriate loan amount you approve for and put it towards your hospital bill or other unexpected expenses. This plan will allow you to pay it off over time. You can use a personal loan anywhere from medical bills, your dream wedding, a house, car, or school expenses.
Using personal loans is not something you should be ashamed of doing. Many people have to use them to organize their finances. It is an excellent tool for people who don’t have the budget for life events or needs.
So, what are some misconceptions? Here, we will debunk some of the myths associated with personal loans in Tyler Texas.
Personal Loans Have High-Interest Rates
While personal loans have higher rates than other loans, they are certainly lower than credit cards. A good rule of thumb is if you are paying 26% or higher on credit card balances, it makes more sense to take out a personal loan for your expenses. This alternative will save you money long-term rather than pouring money into a credit card with ridiculously highinterest rates.
It’s Best to Apply for the Maximum Loan Eligibility
When needing a personal loan, you may think it is best to borrow the maximum amount if you need more money. However, this isn’t the most economical thing to do. You’ll still have to pay back the loan amount you borrowed, so it doesn’t exactly help. Before you borrow from Kelly Community Federal Credit Union, it’s best to use a loan calculator to determine what you’ll need.
Only People with a Job Are Eligible for a Personal Loan
Typically, if you are applying for a personal loan, you will need to be employed – but this is not the case for everyone. It is not a requirement to have a job, but it is essential to show employment history. For example, if you are temporarily laid off and need a personal loan, most banks should be able to work with you and your circumstances. Or, if you’ve completely lost your job, you may be eligible for a loan with a co-borrower. Speak to your lender about your options.
A Personal Loan Is Detrimental to Your Finances
With multiple loans already on your plate, it might not be the best option to get a personal loan. This option can increase the burden of more debt and interest rates, leaving you stressed out. But if you are using a personal loan as a debt consolidation tool, this can help you organize your loans and lower your interest rates considerably.
Great use of a personal loan can also be for education. More education means higher-paying jobs. So, if you are interested in advancing your career with another degree, getting a personal loan for education uses can benefit you long-term.
Your Credit Has to Be High to Get a Personal Loan
People with lower credit scores are eligible for personal loans. While it does mean your rate might be higher, this doesn’t mean it isentirely out of the picture. And if you are denied a loan because of your credit, you might need a co-signer or borrower to help you obtain it. There’s also plenty of ways to increase your credit score to increase your eligibility.
Applying for a Personal Loan Is Hard
Those attending or graduated from college understand the tedious and lengthy process FAFSA applications can be. These government installment loans are built for education purposes and can take up some of your time. However, typical personal loans from a lender don’t take that much time – don’t let past loan experience sway your decision.
While it might seem time-consuming to apply for a personal loan, it ispretty simple. Overall, the process is quick and easy and requires less information than any other loan. If you want to ensure a smooth application, make sure you get the documentation you need.
Personal Loans Are Only for Personal Expenses
While a personal loan can pay for personal things, like consolidating debt, paying for a wedding, or educational certification, its purpose isn’t strictly personal. A personal loan is helpful for many things such as unexpected expenses, a temporary payday loan, updating your home, getting car repairs, a title loan, or paying for medical bills.
You Can Only Get a Personal Loan from a Bank
Years ago, this myth would be true. But nowadays, you can apply for personal loans from many different sources. Luckily, there are plenty of options from online lenders and banks that give you various options. Applying online for a personal loan is very simple and doesn’t take long to see if you’re approved; it’s almost instantaneous. After getting approved, your loan should be ready to use within a few days. And, it’s easy to view different rates online through multiple lenders such as Discover, Rocket Loans, or Lending Club.
Applying for Personal Loans Can Damage Your Credit Score
If you’re worried about the slightest impact on your credit score, it might not be an excellent time to apply for a personal loan. While your credit score can be minorly affected, it won’t damage your credit score exponentially. A few inquiries can shed a few points from your credit, but it doesn’t mean it’ll damage it forever. In fact, by applying for a personal loan and obtaining it, you can increase your credit score again by making regular payments over a few months. It’s a win-win for your needs and your credit score.
Is a Personal Loan Right for You?
Many people opt for personal loans for several reasons. If you’re interested in applying for a personal loan, now might be the right time for you. For more information, visit Kelly Community Federal Credit Union today.