From Yahoo Finance: 2025-06-17 12:01:00

When applying for a personal loan, avoid common mistakes like not checking your credit score beforehand. A lower score can mean higher interest rates. Don’t make multiple applications at once, as it can hurt your credit. Take time to research rates from different lenders to find the best deal.

Before borrowing a personal loan, determine the exact amount you need. Don’t take more than necessary, as every dollar borrowed costs you money in interest. Avoid stretching out the loan term just to lower the monthly payment; it can end up costing you more in total interest.

Personal loans may come with hidden fees like origination fees, prepayment penalties, and late payment fees. Be aware of these costs before signing any agreement. Personal loans are best suited for debt consolidation, emergencies, or one-time expenses, not for luxuries or items that lose value.

Understand how you will repay the loan before borrowing. Missing payments can damage your credit and lead to penalty rates. Be honest about your budget and ability to make monthly payments. Defaulting on a personal loan is detrimental to your financial health.



Read more at Yahoo Finance: 8 Common Mistakes To Avoid When Applying for a Personal Loan