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With rising expenses and lifestyle demands, many Indians are turning to loans to fulfil their needs. However, debt levels are climbing sharply. According to the latest RBI report, household debt has risen by 102% between 2019 and 2025, while financial assets have increased by only 48%. If you are considering a personal loan, pause for a moment. Here are five crucial things you must check before signing up—otherwise, the burden of EMIs could disturb your peace, finances, and sleep. Taking a personal loan for essential needs—such as medical emergencies or home-related expenses—can be justified. But borrowing money to maintain a luxury lifestyle or fulfil temporary desires can put you in long-term debt. A home loan can be a priority, but for other expenses, take a loan only when absolutely necessary—such as for education, unavoidable emergencies, or critical life requirements. If you need ₹2 lakh, avoid taking ₹2.5 lakh “just because the bank is offering it.” A higher loan amount means a higher interest burden. Borrow strictly according to your requirement. Interest rates vary significantly from one lender to another. Comparing rates in advance can help you reduce your EMI as well as the total interest you pay over time. If you have savings such as a fixed deposit or mutual funds, consider loans against these assets. These secured loans come at lower interest rates compared to personal loans, which are unsecured and therefore costlier.
