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3 Signs You Shouldn’t Take Out a Personal Loan


A personal loan is an unsecured borrowing, meaning that you don’t need to offer any collateral. Furthermore, personal loans can also be used for a variety of purposes, and have no specific end use clauses attached like home loans or vehicle loans.

This makes personal loans the preferred choice for anyone who is looking for some extra cash to meet emergency expenses or needs. It is also very easy to apply for instant personal loans online these days, since many lenders offer quick disbursal of funds.

That said, borrowing money when you cannot afford to promptly repay the personal loan EMIs as per the repayment schedule can affect your credit score and can lead to additional interest and late payment fees.

So, you need to be absolutely sure that the loan is necessary before you apply for instant personal loans. Here are 3 signs it may be a better idea to not take out a personal loan.

You Can Put Off the Purchase or Expense 

If you are planning to borrow a personal loan for making a big ticket purchase that you cannot really afford and don’t really need right now, it may be a sign that you shouldn’t avail a personal loan.

This is because you may not be able to afford the personal loan EMI once you have borrowed the money. In that case, you will be stuck with a debt you cannot really repay. This does not bode well for your finances. It may be a better idea to put off the purchase until you can afford it.

You are Borrowing to Invest 

Borrowing to invest can be a tricky financial move. Your personal loan comes with the interest cost, while your investment offers you returns. Unless the rate of returns you earn from your investment exceeds the cost of borrowing, this is not a smart financial move. 

So, if you are planning to apply for instant personal loans to invest in any scheme or asset, pause for a bit and compare the return rate and the interest rate. If the latter is greater than the former, your investment returns will go towards repaying your personal loan EMIs, leaving you with no gains.

You are Borrowing to Repay a Loan

If you already have a ton of debt and need more funds to repay your existing liabilities, a personal loan is not the solution to that. Borrowing to repay another existing loan is not a financially savvy move. 

If you are already unable to repay your current debts, taking on another loan will only be an added burden. Repaying your new personal loan EMIs on time will then become an issue, leading to more penalties. 


Before you rush ahead and apply for an instant personal loan online or via a bank branch, make sure you pause and check if this loan is necessary. In case you notice the signs outlined above, or if you feel that the borrowing may be unnecessary at the moment, you can put off your loan for later, when you really need it.