Common Loan Myths

Common Loan Myths

Common loan myths can prevent a lot of people from borrowing a loan, especially when they might actually need one. The majority of information you may read online and in the media is not always real and truthful. So, if you are unsure you should always contact a lender or a broker to check anything before borrowing. Loans and lenders are portrayed very negatively in the media, but that does not mean that every lender is a loan shark. Therefore, we have put together some of the most common loan myths so you can get a better understanding of the truth behind loans.

common loan myths - person with laptop

Apply for a loan is difficult

Back before technology evolved to what it is like today, all of the lenders, brokers and banks required you to fill in a form with all of your details and then post it to them. Following this, the organisation would make their way through each form manually meaning that it could have taken around a month to get your loan.

But, now, everything is completed online. Your application can be found very easily, all you need to do is provide basic information and then you are able to send it off. Usually, a lender could take up to 24 hours to accept or decline your request. But, nonetheless, it is still a lot faster and easier than it used to be.

Loans will hurt your credit score

This is a common loan myth which you may be asking yourself, especially if you already have a low credit score. To some extent, this could be true, but it does not have to be. In other words, a loan will only hurt your credit score if you repay your payments late or miss them. Other than that, if you pay back on time, your credit score may increase. This is because you are showing the ability and skill of good money management. Therefore meaning that it will be easier for you to apply for credit in the future.

Here at PM Loans, when you borrow a loan, the repayments are monthly. This gives you a better chance to repay the loan and also will help you work on your money management.

Applying to multiple lenders at once will increase your chances of being accepted.

Although this statement may sound correct, it definitely is not. Applying to multiple lenders at once can massively impact your credit score. Each time you apply to a lender, they have to conduct a hard credit check on your report. This means that that you will lose a few points. Applying to one is not the end of the world if it is necessary, but applying to multiple can be one of the worst ideas out there. If you feel as though your credit score is not great and you are unsure whether or not the lender you are considering will accpet you, you always have the option of a broker instead.