Dhanteras 2025: What every personal loan borrower must know to avoid festive debt

Dhanteras 2025: As the festive shopping season kicks in, many households are tempted by attractive sales, cashback offers, and big-ticket purchases. To meet these expenses, personal loans often become the go-to option, but financial experts urge caution.

Personal loans are often taken in such cases to fulfil long-pending desires and meet unexpected cash requirements. Still, financial experts caution borrowers to carefully consider and evaluate their repayment potential before applying for a new loan to prevent long-term financial complications.

Importance of checking your loan affordability

Given that attractive festive loan offers are likely to flood the market with lower interest rates and seamless approvals, aspiring borrowers must exercise caution and conduct thorough due diligence before applying for any specific loan. To accomplish this, you should:

1. Calculate your net requirement carefully, taking into account available savings.
2. Avoid borrowing more than the required funds. The lesser the debt you avail, the better it is.
3. Use personal loan EMI calculators from leading financial institutions to assess monthly outgo and ensure it stays within manageable limits.
4. Your personal loan EMIs should not exceed 35-40% of your monthly income.
5. A proper repayment strategy must be devised before taking a new loan.

Kumar Binit, CEO at Airpay Money, shares, “Financial wellness begins with responsible borrowing. Before taking a personal loan this festive season, assess your repayment capacity and avoid stretching EMIs beyond 35–40% of your monthly income. A festive loan should add joy, not financial stress.”

Compare and verify personal loan offers

Furthermore, before moving ahead with a loan offer, it is essential to write down and compare various similar offers from reputable banks and NBFCs. Festive offers might include lower processing fees, rewards, or cashbacks on new loans, but the rate of interest applicable to such loans should also be scrutinised carefully by the aspiring borrower. To ensure that you secure the best possible loan, you should:

1. Focus on reputable lending institutions with transparent terms and conditions.
2. Carefully understand the total cost of credit, i.e., prepayment charges, processing fees and other expenses to avail the loan.
3. Don’t send multiple loan applications within a short span of time, as it can lower your credit score.
4. If you have doubts about borrowing, discuss your concerns with a certified financial advisor.
5. Divide your total fund requirement properly and ensure that you repay the loans on time.

Significance of maintaining financial discipline

Even during festivities and times of celebration, it is crucial for aspiring borrowers to be cautious and avoid falling prey to emotion-based borrowing. To accomplish the same task, you should:

1. Continue to pay your existing EMIs on time to maintain a strong credit history.
2. Opt for shorter personal loan tenures to minimise total interest expenses.
3. Don’t fall for just offers and discounts; understand your needs before availing a product.
4. Understand that when you proceed with a personal loan, you are entering into a legal contract.

Risks of taking a personal loan

When you apply for a new personal loan, you open yourself up to several associated risks. Some of them are:

1. High interest rates on the applied loan.
2. The possibility of falling into a debt trap exists if EMIs are missed.
3. Damage to your credit score in case of missing EMI due dates.
4. Hidden fees and charges related to prepayments.
5. Possibility of legal action if you default on the loan.

In conclusion, this Dhanteras, let credit enhance celebration, not compromise your financial stability and peace of mind.

For all personal finance updates, visit here.

Disclaimer: Mint has a tie-up with fintechs for providing credit; you will need to share your information if you apply. These tie-ups do not influence our editorial content. This article only intends to educate and spread awareness about credit needs like loans, credit cards and credit score. Mint does not promote or encourage taking credit as it comes with a set of risks, such as high interest rates, hidden charges, etc. We advise investors to discuss with certified experts before taking any credit.