Whether you are in the market for a new car, holiday or one of a myriad of other indulgences or necessities, a personal loan can be the fairy godmother which makes it happen.

Many people are cautious when it comes to approaching a lender about a personal loan. After all, not everyone can boast a pristine credit history or unblemished financial past. This often means that we balk when it comes to making contact with a lender--after all, no one likes to be rejected!

Misconception 1 - You can’t get a loan with a poor credit history

One of the biggest misconceptions about obtaining a loan revolves around having a bad credit history. When I recently realised that my car was on its last legs and I was in dire need of a replacement, my thoughts, reluctantly, turned to my credit card.

A wise friend, unaware of my chequered lending history as a youth, suggested a personal loan would be a much cheaper option. Seeing my reluctance, he assured me that there were companies out there who understood the fact that an unblemished credit history is not the be all and end all of lending.

He advised me that personal loans from Latitude Financial for example, took in my recent credit history rather than hark back to my younger, sillier days. Perfect!

Misconception 2 - A personal loan must be secured

Another area where there is some confusion is whether personal loans require security. Whilst a loan secured by an asset may attract a lower rate of interest, having no security is not a deal breaker for some lenders.

Proving you have the income to maintain the loan repayments by means of supporting documentation and tax returns, can counter your lack of securable assets.

Misconception 3 - You have to be poor to need a loan

On the contrary, sometimes getting a loan is the wisest course of action even if you have the money in the bank. With interest rates currently so low, repaying a loan makes sense, as it:

• Can bolster your credit rating

• Maintain your healthy bank balance

• Doesn’t tie your money up to a single asset

Many wealthy individuals borrow money for investment purposes. This is especially advantageous for those in the higher tax brackets as it provides the added benefit of tax breaks.

Misconception 4 - You can’t have more than one loan at a time

While it may be true that a lender will consider all your financial commitments before approving you for a loan, it doesn’t follow that you can’t apply for a number of loans.

Some loans, such as student loans are garnished directly from one's salary. This means that a personal loan application will be considered based on your income after the debit for the student loan--not a deal breaker.

An attractive option for a lender may be to consolidate your loans into a single packaged. Offering them the other loans as a lure, may get your current application over the line.

Misconception 5 - A personal loan can affect your ability to get a housing loan

Depending on the size of your loan and your income, a personal loan needn’t impinge on your ability to obtain a housing loan. Whilst the loan will be taken into account, the borrowed amount will be a key factor. Strategies such as lowering your credit card limit can be used to balance or mitigate the issue whilst also improving your credit rating.

If you have found yourself considering the benefit a personal loan could make to your life, don’t let fear of the unknown prevent you from approaching a lender.

With a well devised payment plan, structured and optimised to complement your lifestyle, that new car or overseas trip could be yours sooner than you think.