Borrowing Smartly A personal loan can be a powerful financial tool, but only if used wisely. Here are some common mistakes to steer clear of.

1. Not Comparing Lenders Don't just go with the first offer you get, even if it's from your own bank. Interest rates, processing fees, and other terms can vary significantly between lenders. Use a platform that allows you to compare multiple offers to find the best deal.

2. Borrowing More Than You Need It can be tempting to borrow a larger amount than what you need for your immediate purpose. Remember, every rupee you borrow needs to be paid back with interest. Stick to the amount you absolutely need to avoid an unnecessary debt burden.

3. Ignoring the Fine Print Read the loan agreement carefully before signing. Pay close attention to the interest rate, processing fees, prepayment penalties, late payment charges, and other terms and conditions. Not understanding these can lead to unpleasant surprises later.

4. Choosing the Wrong Loan Tenure A longer tenure means a lower EMI, which might seem attractive. However, a longer tenure also means you pay significantly more in total interest over the life of the loan. Choose the shortest tenure with an EMI you can comfortably afford.

5. Not Having a Repayment Plan Before you take the loan, have a clear plan for how you will repay it. Factor the new EMI into your monthly budget. Defaulting on your loan will severely damage your credit score and financial health.

Key Takeaway Being a disciplined and informed borrower is crucial. Do your research, borrow responsibly, and always read the terms and conditions.