NEW YORK, NY / ACCESSWIRE / March 6, 2023 / OneMain Financial: The internet is a wonderful source of information. Unfortunately, not everything that's published online is accurate. Word-of-mouth information can be even more unreliable. That said, there are many myths about getting a personal loan, and no surprise, many are simply not true. Here are some of the most common such myths:

Myth #1: Personal loans take a long time to process

This might have been true twenty years ago. With today's technology, personal loans can be approved and processed the same day, with funds transferred in as little as twenty-four hours. The transaction speed depends on the lender, but it's rare to find a lender that takes a long time to process a loan.

Myth #2: Personal loan approval requires a high credit score

This is another myth. Some lenders specialize in serving applicants with poor credit scores. Banks and credit unions will work with borrowers with less-than-perfect credit if they can prove a legitimate income source and have a low debt-to-income ratio. Online lenders may have even more lenient requirements.

Myth #3: Personal loans require collateral

There are different types of personal loans. A secured loan requires the borrower to pledge collateral. Examples of this type of loan include car loans and mortgages, where the purchased vehicle or home is the collateral. Unsecured loans don't require collateral. Typically, these loans are taken out for situations like debt consolidation or to pay emergency expenses.

Myth #4: Personal loans have high-interest rates

This is too much of a blanket statement to be true. Some personal loans may have higher interest rates if the applicant has a low credit score or thin credit history. Some lenders charge more than others. On average, personal loans can be affordable, and in most cases, they cost significantly less than the finance charges associated with credit card debt.

Myth #5: Personal loans can't be paid off early

Some lenders may charge a fee for early repayment, but this doesn't mean the borrower can't pay the loan back early. Early repayment can sometimes be the right move to save on interest charges and fees. If the personal loan is a home mortgage, prepayment fees are prohibited by federal law, so the homeowner can pay off their home loan whenever they choose.

Myth #6: Only banks offer personal loans

Banks and credit unions are not the only entities offering personal loans. Online lenders are part of a global digital lending market expected to reach $20 billion by 2027. Prospective borrowers have many options to choose from if they need a personal loan.

Myth #7: Self-employed individuals can't get a personal loan

This myth deters independent contractors and small business owners who need funds. Lenders want proof of income to approve applicants for loans. That proof doesn't need to be a W-2 form or the latest pay stubs. Self-employed individuals can provide bank statements or 1099s to satisfy the income requirement.

The Bottom Line

Don't buy into the myths. Much of what is written on the internet about personal loans is simply not true. They don't take long to process; a high credit score and collateral are not always required, and interest rates vary from lender to lender. Remember what is true: personal loans can be acquired from online lenders, paid off early, and available to self-employed individuals.

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[1] https://markets.businessinsider.com/news/stocks/digital-lending-platform-market-revenue-to-cross-usd-20-bn-by-2027-global-market-insights-inc-1030445669

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Keyonda Goosby
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SOURCE: OneMain Financial