Avoid These 5 Costly Mistakes Before Taking a Personal Loan in India

Why Avoiding Mistakes in Personal Loans is Crucial

Personal loans can quickly meet urgent needs, but small mistakes can cost you big in the long run. Here’s a guide to avoid five common mistakes that most borrowers in India make — and how to protect your finances.

Choose your loan wisely

1. Not Comparing Interest Rates

📌 What goes wrong?

Borrowers often accept the first loan offer they receive without checking rates elsewhere.

📌 Why it matters:

Different banks/NBFCs charge different rates. Even 2% difference can mean thousands more paid over the loan term.

📌 What to do:

Compare rates on aggregator sites like Paisabazaar, BankBazaar, etc.

Get quotes from at least 3 lenders.

2. Ignoring Hidden Charges

📌 What goes wrong?

People ignore fees like processing charges, documentation fees, prepayment penalties.

📌 Why it matters:

Hidden costs increase your effective loan cost, eating into your savings.

📌 What to do:

Ask the lender for a complete cost breakdown.

Read the loan agreement carefully before signing.

Always read the fine print — hidden loan charges can silently increase your burden."

 3. Borrowing More Than Necessary

📌 What goes wrong?

Banks often encourage taking bigger loans. Many borrowers fall for it, borrowing more than they actually need.

📌 Why it matters:

Higher loan amount = bigger EMIs + more interest paid.

📌 What to do:

Calculate your exact requirement.

Borrow only what you can comfortably repay.

A low credit score can lead to rejection or higher interest

4. Not Checking Credit Score

📌 What goes wrong?

Applicants skip checking their credit score before applying. If it’s low, they face rejections or high interest rates.

📌 Why it matters:

A low score (<700) weakens your negotiating power, increases interest rates, or causes rejection.

📌 What to do:

Check your credit score for free on CIBIL or Experian.

Improve score if needed before applying.

5. Falling for Fake Loan Offers

📌 What goes wrong?

Scammers lure desperate borrowers with guaranteed approvals, fake websites, or fake calls.

📌 Why it matters:

You may lose money to fraudsters or end up sharing sensitive personal data.

📌 What to do:

Never pay upfront fees to unknown agents.

Always apply via official bank/NBFC websites.

Beware of fake loan messages and fraud calls — always verify before sharing details."

Final Takeaway: Be a Smart Borrower

Avoiding these common mistakes helps you: ✔ Save thousands on interest & charges

✔ Get better loan offers

✔ Stay protected from fraud

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friends planning to take a personal loan. Your share might save them from big financial mistakes!

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