Loan Alert: Avoid These 4 Mistakes When Taking a Loan — 90% People Are Unaware

Loan Alert: Avoid These 4 Mistakes When Taking a Loan — 90% People Are Unaware

There may come a time in life when we urgently need a large sum of money. For middle-class families, arranging such an amount instantly can be challenging. Whether it's for higher education, medical emergencies, weddings, or business expansion, loans often become a necessary option. However, while taking a loan, even a small mistake can lead to major complications later. Surprisingly, nearly 90% of borrowers are unaware of some basic precautions they should take. Here are four critical mistakes you must avoid when applying for a loan:

1. Always Read the Terms and Conditions Before Signing

Whenever you apply for a loan, the bank or financial institution will present a set of terms and conditions. Many people skip reading them and sign in haste. This can lead to unexpected charges, penalties, or unfavorable clauses. Always read the fine print carefully, understand every point, and clarify doubts with your bank before signing any document.

2. Avoid Brokers and Middlemen

Some borrowers approach brokers due to low CIBIL scores or the need for higher loan amounts. While this isn’t inherently wrong, it comes with risks. Brokers often charge hefty commissions, and some may even mislead you. It’s safer and more economical to apply directly through a bank. Never pay a broker upfront—only pay after the loan is successfully disbursed.

3. Compare Interest Rates Across Banks

Many people apply for loans from the bank where they already have an account, without checking other options. This can be a costly mistake. Interest rates vary across banks, and a lower rate can significantly reduce your EMI burden. Always compare loan offers from multiple banks before making a decision.

4. Don’t Use Third-Party Apps for Loans

Nowadays, many people opt for small personal loans via mobile apps. But are these apps trustworthy? There have been numerous cases where borrowers were harassed or threatened when they delayed repayment. Some apps have even misused personal data. To stay safe, always borrow from a recognized bank or through your bank’s official app—never from unknown third-party platforms.

Taking a loan is a serious financial commitment. By avoiding these four common mistakes—signing without reading, relying on brokers, ignoring interest rate comparisons, and using unsafe apps—you can protect yourself from future stress and financial loss. Stay informed, stay safe.