Core Insights - Personal loans can be beneficial but come with potential pitfalls that borrowers should be aware of Group 1: Common Personal Loan Mistakes - Borrowing too much can lead to higher long-term costs, even if the extra cash seems convenient [2][3] - Not accounting for fees, such as origination fees that can be as high as 10% of the loan amount, can result in receiving less than expected [5][6] - Applying for the first loan found without comparing offers can lead to unfavorable terms; borrowers should review at least three different lenders [7][8] Group 2: Prequalification and Repayment Terms - Skipping prequalification can hinder the ability to compare personalized loan options effectively, potentially leading to higher interest costs [9] - Opting for a longer-than-needed repayment term can result in higher interest rates and increased overall interest costs [10] Group 3: Purpose of the Loan and Payment History - Borrowing for nonessentials can lead to financial strain; personal loans should ideally be used for necessary expenses or debt consolidation [11][12][13] - Missing payments is the most damaging mistake, as it can significantly harm credit scores and affect future borrowing opportunities [14][15]