Personal loans are widely used and a useful tool to reach your financial goals and responsibly manage high interest debt. Some people find that they can reach financial independence sooner, by consolidating higher interest debt into a lower interest rate personal loan. Others seek out a personal loan for a short term emergency, or unexpected expense. There are high interest personal lenders out there, such as payday lenders, so do your research to understand the interest rate you’ll be paying, the loan repayment commitment, and loan term. Having flexibility to make extra repayments at no additional charge can also be an important factor for some people.
In addition to doing your research into rates, fees and repayments, we’re keen to discuss some common misconceptions about personal loans. If you decide you need a personal loan, it’s often because you need a fast loan. Here are six common myths about personal loans, that may help speed up your decision about applying for a personal loan.
Myth 1. A high credit score is necessary for personal loan approval
Your credit score will affect the type of personal loan you’re offered – it can impact the interest rate you’re offered and the maximum loan amount you can apply for. It doesn’t mean you can’t apply for a personal loan though. Talking to a reputable lender is a great way to discuss your unique situation, and understand how you can apply for a personal loan with the best outcome for you.
At Nectar, we work with our customers to help them understand how and when they can afford a personal loan, and what lifestyle changes they may need to make before they even make an application.
Myth 2. Loan applications are deliberately confusing
Personal lenders want to issue personal loans that meet your financial goals, and are repaid on time. All personal lenders have responsible lending obligations, so the questions we ask about the income you have coming in each month and the regular expenses you have going out of your bank account, are all about working out the repayments you can afford.
It doesn’t help us, or you, if someone borrows more than they can afford to repay. And it’s in everyone’s best interests if personal loan rates and terms are simple and easy to understand.
Nectar simplifies the personal loan application process with a simple, online application process. You’ll receive a personalised loan quote within 7 minutes that you can review and decide whether you want to accept.
Myth 3. Online loans are tedious and slow
The myth of the cumbersome online loan application may once have been a valid concern, but online personal lenders like Nectar have worked hard to create an online application process that is simple and easy to navigate.
Nectar has a handy loan repayment calculator for you to understand your likely interest rate, amount you can borrow and repayment terms, before you even make an application. If you’re happy with the rates and terms, the simple online application process will give you a quote within seven minutes. We call that great customer service!
Myth 4. You can only have one outstanding loan at a time
You might think that because you still have an outstanding student loan balance or an unpaid credit card, you cannot borrow any more money. Fortunately, you can take out more than one loan at once.
If you need help to reach your next financial goal, such as a top up to purchase a car to help you get to work each day, don’t discount applying for a personal loan because you have other debts.
Personal lenders have a responsibility to ensure that you have the ability to repay all your debt commitments. If you’re unsure, contact us to chat through your financial circumstances, and we’ll help you make a plan to meet your requirements.
Myth 5. Personal loans will hurt your credit score
The aspects of taking on debt that can damage your credit score relate to not meeting your repayment obligations (ie. not paying your debt repayments, or paying late), and applying for multiple loans or credit cards in a short space of time.
Applying for and accepting a personal loan will not damage your credit score, in fact, making all your payments on time will help it!
That’s why it is important to do your research before making a personal loan application, so that you’re confident you can make the required repayments, and are engaging with a reputable lender.
Myth 6. All personal lenders are the same
Personal loans can be applied for at your local bank, with a payday lender or specialist personal lender.
Like all businesses, some personal lenders are more ethical, transparent, affordable and responsive than others. As always, do your research.
Nectar provides a competitive personal loan offering
Nectar prides itself on meeting today’s customer service requirements – loan flexibility, simplicity and speed. But don’t just take our word for it, check out what other Kiwis have to say about our great products and premium service.
Why not take charge of your financial future today.
Getting started with Nectar
We hope we’ve helped you better understand some common myths about personal loans. Check out our quick and convenient personal loan online process. You can get started with Nectar and receive a loan quote, including your interest rate, maximum borrowing amount and repayment options in minutes. Borrow better, faster today!
*Nectar’s lending criteria and responsible lending checks apply.