The Consequences of Taking Out a Personal Loan You Can't Afford

Consequences of Taking Out an Unaffordable Personal Loan

Borrowing an unaffordable amount of money through a personal loan can lead to severe financial repercussions. From compromising other financial goals to damaging credit scores and facing possible legal actions, it's crucial to understand the risks before taking on debt you may struggle to repay. Ensuring affordability is key to avoiding long-term consequences of a personal loan.

You could compromise other financial goals

• You could damage your credit score: Payment history is the most important factor in your credit score, and even one late payment could bring that score down by over 100 points.
• You may be charged late fees: If you pay your personal loan late because you don't really have the money to make payments on time, this could lead to late fees being charged.
• You could end up getting a judgment against you: If you can't pay back the loan at all, you could end up with the lender sending you to collections.

For all of these reasons, it's critical you make sure you can afford any personal loan you might take out. Otherwise, you could face all these undesirable consequences of taking out a personal loan you can't afford.