1. Skipping a Credit Check Before Applying

Your credit score plays a major role in whether you qualify and what rate you’ll receive. Many borrowers start loan shopping without reviewing their credit score first. This can lead to surprises like higher interest rates or even denial of approval. Always review your credit report in advance, correct any errors, and take steps to improve your score before applying.

2. Accepting the First Offer Without Comparing

Not all lenders offer the same terms. If you accept the first loan you’re offered, you might pay more interest or fees than necessary. Comparing multiple lenders helps you see the full range of options and gives you leverage to negotiate better terms.

3. Looking Only at the Interest Rate

A low interest rate sounds appealing, but it doesn’t tell the full story. The annual percentage rate (APR) includes interest and fees, which gives a more accurate view of the loan’s cost. Also, factor in closing costs, origination fees, and potential penalties.

4. Overlooking Additional Fees and Costs

Beyond the rate and APR, many loans come with extra charges. These can include application fees, origination fees, insurance requirements, or prepayment penalties. Ignoring these costs can make a “cheap” loan much more expensive than it appears. Ask lenders for a full breakdown of all fees before you sign.

5. Borrowing Without a Clear Plan

Taking out a loan without thinking through your repayment strategy is risky. You should know exactly how you’ll use the funds and how you’ll make payments over time. Consider your income stability, future expenses, and financial goals. Without a plan, you may choose terms that don’t match your situation.

6. Making Big Financial Moves During the Process

Lenders usually recheck your financial information before finalizing the loan. Opening new credit cards, making large purchases, or changing jobs can raise red flags and even derail approval. It’s best to keep your finances steady until the loan is complete.

7. Delaying Too Long or Rushing Into a Decision

Some borrowers wait too long, hoping rates will drop, only to miss favorable terms. Others rush into a loan without comparing alternatives. Both approaches can be costly. The smart move is to research, compare, and act once you’ve found terms that make sense for your budget.

Smart Loan Shopping Tips

To make the most of your search:

• Use online loan calculators to estimate monthly payments.
• Compare at least three lenders before deciding.
• Ask about every fee and penalty upfront.
• Be realistic about how much debt you can manage comfortably.

Careful loan shopping puts you in control, helping you avoid unnecessary costs and ensuring the loan truly works for your needs.