Stories
90% Make These Personal Loan Mistakes! Are You Falling Into This Trap?
- •Low interest rates don't always mean cheap loans; banks add processing and other fees.
- •Avoid taking more loan than needed; only borrow what you can comfortably repay.
- •Don't extend loan tenure to lower EMI; longer terms mean more interest paid.
- •Check prepayment and foreclosure charges in the loan agreement before signing.
- •Applying to multiple banks simultaneously can damage your credit score.
- •Carelessness in EMI payments is detrimental to your credit profile; pay on time.
Key Questions Answered
A low interest rate advertised on TV or social media does not always mean a cheap loan because banks often offset it by charging high processing fees, documentation charges, file charges, and administrative costs, which significantly increase the total borrowing cost.
Applying for multiple personal loans on various fintech apps or bank websites on the same day causes a hard inquiry on your credit report with each application, making you appear as a risky and desperate customer and damaging your financial credibility.
Stretching your loan tenure from 3 years to 5 or 7 years makes the monthly EMI look smaller and more affordable on paper, but it causes a financial loss because the longer tenure results in paying significantly more total interest to the bank.
