Top 7 Mistakes to Avoid When Applying for a Personal Loan

Checklist of mistakes to avoid when applying for a personal loan

Applying for a personal loan can be straightforward—if you avoid common pitfalls. In this post, we’ll highlight seven mistakes that often cost borrowers time, money, or approval, and show you how to steer clear of them.

Table of Contents

1. Not Checking Your Credit Score First

Your credit score directly impacts your APR. Always pull your credit report, fix errors, and pay down balances before applying.

2. Skipping Prequalification

Prequalification gives you estimated rates without a hard inquiry. Skipping this step can lead to unpleasant surprises after you apply.

3. Ignoring Fees and Hidden Costs

Origination fees, late-payment fees, and other charges can add up. Read the fine print and choose zero-fee lenders when possible.

4. Choosing Too Long or Too Short of a Term

Short terms lower total interest but increase payments; long terms reduce payment size but cost more interest over time. Pick the term that fits your budget and goals.

5. Overborrowing Beyond Your Means

Just because you qualify for $20,000 doesn’t mean you should borrow it. Calculate your budget and borrow only what you need.

6. Missing or Late Payments

Late payments can incur fees and hurt your credit. Set up autopay or reminders to ensure you never miss a due date.

7. Relying on One Lender Without Shopping Around

Interest rates and terms vary widely. Prequalify with multiple lenders—like LendingClub and Upstart—to compare before committing.

This post contains affiliate links. We may earn a commission at no extra cost to you.

Start Prequalification with LendingClub → Start Prequalification with Upstart →

Conclusion

Avoiding these seven mistakes can streamline your application, save you money, and secure a lower APR. Follow these tips and shop around to find the best personal loan for your needs.

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