Common mistakes when borrowing money

Fact checked
Fact Checked.
Updated on
September 3, 2021


In a nutshell

We all make mistakes when borrowing money, whether it's not reading the small print, or borrowing more than you need. But even though we’ve all been there, no-one likes to repeat their mistakes. Follow our simple tips on how to avoid the most common mistakes we’ve all made – saving you time and money instantly!‍

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Forgetting about fees

It’s so easy to forget about extra fees or any closing costs when borrowing money, whether it’s a loan or a mortgage. Remember to read all the fine print and talk about your concerns to the money lender before you agree to the loan.

Not shopping around

We know how you feel, shopping for a loan can be just about the most boring experience since that time you stocked up on loo roll and washing up liquid in Poundland! But the more places you research, the better the deal will be. Look online, go to local banks and make sure you get the best loan for you – on your terms!

Thinking it’s free money

It can be tempting to see a loan like a lottery win. But of course, we all know that there’s no such thing as free money. Everyone has to repay what they’ve borrowed, sooner or later, so save yourself the stress and make sure you can afford the repayments before you borrow.

Not checking your credit score

Getting your credit rating up to scratch first, before you take out a loan, is one of the most important and simple things you can do. Read our top tips here for easy ways to improve your credit rating. Once you have a decent credit score you may find it easier for loans in the future too.

Credit score

Getting too emotional

It’s hard not to get emotional when you really need to borrow money and it can be hard to keep thinking straight. But try to step back and stay rational when considering all your options. If you’re borrowing money to help a friend, upgrade to a bigger house or to buy a new car when your old one is fine (if a little shabby) then think long and hard before you take out a loan. Do you really need the extra stress in your life?

Borrowing more than you need

So tempting, right? We’ve all been there. But borrowing more than you need isn’t a great idea, it’ll make your repayments larger and you’re also more likely to get accepted if you apply for a smaller loan – so be strict with yourself if you can!

Not asking any questions

We’ve all felt worried about what questions we should ask when borrowing money. Everyone just wants to get the whole process done and dusted quickly – that’s only natural. But if you’re borrowing money, it’s your right to ask as many questions as you like. Let the lender know all your thoughts and worries, talk about your situation and be honest about what you need the money for. This will ensure you get the best deal for your needs.

Finally, remember… taking out a loan is a big deal so don’t try to hurry up the process or take it lightly, really take the time to think about everything before borrowing. Most people who’ve made borrowing mistakes in the past say the one thing they’d change would be to take more time to think about taking out the loan before agreeing to it. Keep it on your terms so you’re the one in control!

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