5 Mistakes to Avoid When Applying for a Personal Loan

5 Mistakes to Avoid When Applying for a Personal Loan

Young man applying for a personal loan online, reviewing documents and calculator on desk.

Applying for a personal loan can be a smart way to consolidate debt, fund a large purchase, or manage unexpected expenses. But if you’re not careful, common mistakes can cost you money or lead to rejection. Here's how to avoid them.

1. Not Checking Your Credit Score

Your credit score plays a big role in loan approval and interest rates. Ignoring it could mean a surprise rejection or higher costs.

  • Tip: Check your credit score for free via ClearScore or Equifax before applying.

2. Applying for Too Many Loans at Once

Submitting multiple loan applications within a short period can hurt your credit score due to multiple hard inquiries.

  • Tip: Compare lenders first, then apply for just one suitable loan.

3. Borrowing More Than You Need

Taking out extra cash may seem convenient, but it leads to higher repayments and more interest.

  • Tip: Borrow only what you truly need. Use a loan calculator before applying.

4. Ignoring Comparison Rates

The advertised rate (interest rate) might look attractive, but the comparison rate includes fees and gives a clearer picture.

  • Tip: Always compare the comparison rates — not just the interest rate.

5. Not Reading the Fine Print

Some personal loans come with hidden fees, early repayment penalties, or restrictive terms.

  • Tip: Read the loan agreement carefully and ask questions before signing.

Affiliate Opportunities – Compare & Apply

  • Money.com.au: Compare personal loans from major Aussie lenders
  • Finder Australia: See personalised loan offers based on your credit profile
  • Plenti: Personal loans with fast online approval (low fees)

Final Thoughts

A personal loan can empower you financially when used wisely. Avoiding these mistakes will help you secure the best deal and manage your debt responsibly.

Coming up next: The Ultimate Guide to Saving for Your First Home

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