Personal Loan Tips: What Not to Do When Taking a Loan
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Looking for a quick personal loan? You’ll find no shortage of lenders promising cash in your account within minutes. But while it’s easy to borrow, it’s even easier to make mistakes that can cost you dearly. Your journey with a lender doesn’t end when you get the loan—it begins there. So before you hit "apply," here are six common pitfalls you should steer clear of:
Falling for High Interest Rates
Just because a lender approves your loan quickly doesn't mean it’s a good deal. High interest rates can turn a small loan into a long-term burden. Shop around, compare rates, and don’t let speed trump cost.
Choosing Unreliable Lenders
In a sea of apps and websites, stick to trusted names—preferably established banks or well-known NBFCs (Non-Banking Financial Companies). If a major lender turns you down, explore alternatives, but verify their credibility.
Ignoring RBI Registration
Always check if your lender or their lending partner is registered with the Reserve Bank of India. If they aren’t, walk away. Unregistered or shady platforms can put your money—and data—at serious risk.
Borrowing for Non-Essential Expenses
A personal loan isn’t free money—it’s a financial commitment . Avoid borrowing for luxury items, vacations, or things you can postpone. Borrow only when necessary, like for medical needs or emergencies.
Overlooking Hidden Charges
Low interest rate? Great. But what about processing fees, late penalties, and prepayment charges? A loan with a 5% processing fee might end up being costlier than one with a slightly higher interest rate. Always calculate the total cost.
Skipping the Fine Print
That checkbox you’re ignoring? It might sign you up for loan insurance or hidden services you don’t need. Read every line, uncheck what you don’t want, and understand all terms before you agree.
A personal loan can be a helpful financial tool—or a trap. It all depends on how informed you are. Take your time, read carefully, and choose wisely. After all, borrowing smart is the first step toward borrowing less.
Falling for High Interest Rates
Just because a lender approves your loan quickly doesn't mean it’s a good deal. High interest rates can turn a small loan into a long-term burden. Shop around, compare rates, and don’t let speed trump cost.
Choosing Unreliable Lenders
In a sea of apps and websites, stick to trusted names—preferably established banks or well-known NBFCs (Non-Banking Financial Companies). If a major lender turns you down, explore alternatives, but verify their credibility.
Ignoring RBI Registration
Always check if your lender or their lending partner is registered with the Reserve Bank of India. If they aren’t, walk away. Unregistered or shady platforms can put your money—and data—at serious risk.
Borrowing for Non-Essential Expenses
A personal loan isn’t free money—it’s a financial commitment . Avoid borrowing for luxury items, vacations, or things you can postpone. Borrow only when necessary, like for medical needs or emergencies.
Overlooking Hidden Charges
Low interest rate? Great. But what about processing fees, late penalties, and prepayment charges? A loan with a 5% processing fee might end up being costlier than one with a slightly higher interest rate. Always calculate the total cost.
Skipping the Fine Print
That checkbox you’re ignoring? It might sign you up for loan insurance or hidden services you don’t need. Read every line, uncheck what you don’t want, and understand all terms before you agree.
A personal loan can be a helpful financial tool—or a trap. It all depends on how informed you are. Take your time, read carefully, and choose wisely. After all, borrowing smart is the first step toward borrowing less.
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