In the world of finance, myths and misconceptions can spread like wildfire, especially when it comes to loans and lending. These misunderstandings can prevent people from making informed financial decisions or taking advantage of opportunities that could benefit them. Today, we’re going to discredit some of the most common myths about loans and lending to help you navigate the financial landscape with confidence.
Myth #1: Only people with bad credit need loans
Individuals and businesses with excellent credit often use loans strategically. For example, a successful entrepreneur might take out a Business Loan to fund expansion, or a landlord with a high credit score might use a Landlord Loan for a major renovation. Loans are financial tools that can be used by anyone, regardless of their credit status.
Myth #2: All loans have sky-high interest rates
While some loans, particularly the unsecured loans, can have high interest rates, this isn’t universally true. Interest rates vary widely depending on factors such as the borrower’s credit score, the type of loan, current market conditions, and the lender’s policies. Many loans, especially for the secured loans, offer competitive rates that can make borrowing an affordable option for achieving financial goals.
Myth #3: You need perfect credit to get approved for a loan
While having an excellent credit score certainly helps, it’s not the only factor lenders consider. Many lenders look at a variety of elements, including your income, debt-to-income ratio, employment history, and assets. Even if your credit isn’t perfect, options like secured loans, cosigned loans, or loans from alternative lenders may be available to you. Springboard Capital has a loan product that is specifically designed to cater for the financial needs of individuals with a not-so-stellar credit score.
Myth #4: Paying off a loan early is always the best choice
While it might seem logical that paying off debt as quickly as possible is always the best move, this isn’t necessarily true. Some loans have prepayment penalties that can make early payoff costly. Additionally, if you have a loan with a very low interest rate, it might be more financially advantageous to invest extra money rather than using it to pay off the loan early. It’s always wise to consider the full financial picture before making decisions about early loan repayment.
Every financial situation is unique, and what works best for one person might not be ideal for another. The key is to arm yourself with accurate information, understand your own financial situation clearly, and don’t be afraid to seek professional advice when needed.
Remember, loans are financial tools. Like any tool, their value depends on how they’re used. By understanding the realities of loans and lending, you can make informed decisions that support your financial goals and help build a secure financial future.
Should you wish to get financial guidance , we’re here for you at Springboard Capital. We’ve had years of hands-on experience in the financial space and can offer insightful tips on how to navigate said space. We also offer various loan products such as Business Loan, Emergency Loan, Asset Financing, Salaried Loan, Loan against Logbook, Import Duty Financing or Title Deed Loan, to help grow and manage all operations. Contact us today at 0700 944 444 or WhatsApp us through the button below, or email us at info@springboardcapital.co.ke.
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Article written by Daniella Aswani.- Daniella is a Marketing professional with a Bachelor’s Degree in Marketing ,and has experience in Brand Marketing, Social Media Marketing and Public relations. She enjoys innovation and coming up with new creative ideas.
