Mistakes to Avoid When Applying for a Personal Loan

Personal loans can be powerful tools, but common missteps lead to regret. Avoid these pitfalls to secure the best terms and protect your credit score .

1. Not Comparing Multiple Lenders

Failing to shop around often means paying higher rates. Compare banks and mobile apps to find the lowest APR .

2. Overlooking Hidden Fees

Processing charges, documentation fees, and insurance can add 1–5% extra. Read the fine print to avoid surprises.

3. Borrowing More Than Needed

Overestimating your needs increases interest costs. Calculate exact requirements and stick to the necessary amount .

4. Ignoring Impact on Credit Score

Multiple hard inquiries in a short span lower your score. Apply to one lender at a time and wait for a decision .

5. Applying With Incomplete Documents

Missing IDs or pay slips delays approval. Gather all required documents—ID, bank statements, KRA PIN—before applying.

6. Not Reading the Repayment Terms

Early repayment penalties and compounding interest can be costly. Review the repayment schedule thoroughly.