With Diwali coming, many families take personal loans for their celebrations. Loans can help pay short-term expenses and reduce money problems. But if used carelessly, they can cause long-term debt and stress.
Experts say personal loans should not be used as easy money. They are useful for urgent needs, but spending carelessly can make them a burden.
Vikkas Goyal, Founder of Rupee112, says, “During Diwali, use personal loans carefully. Do not use them for risky investments, expensive items, or regular expenses. Misusing loans can cause stress and money problems. Use loans only for important festive spending, gifts, or home work to celebrate safely.”
Here are five things you should never do with your personal loan this Diwali:
1. Don’t use it for risky investments
When the loan money comes to your account, plan your repayment first, not your spending. Avoid using this money for lotteries, stock market trading, crypto, or gambling. These are risky and can cause big losses. You will still have to pay EMIs even after losing money.
2. Don’t invest in unknown businesses
A personal loan is not business money. Don’t use it for any unverified business or schemes that sound “too good to be true.” During Diwali, many people get excited and invest without checking. This can cause heavy losses and more debt.
3. Don’t use it to pay old loans or for random spending
Using a new loan to pay old debts or credit card bills without a plan is not smart. It only changes the problem, not solves it. If you already have many loans, talk to a financial expert before taking another one. Proper planning is important to avoid more debt.
4. Don’t spend it on costly vacations
A holiday during Diwali sounds fun, but travel costs are high. Using a loan for luxury trips can hurt your savings for months. Borrow only for real needs, not emotional reasons or social pressure. Enjoy Diwali without money stress later.
5. Don’t buy expensive gadgets or luxury items
Festive sales make gadgets and luxury items look attractive, but they lose value fast. Don’t use a personal loan to buy such things. You’ll end up paying EMIs for something that’s no longer worth much. Instead, if you want to grow your money, invest in gold, silver, or mutual funds after expert advice.
Hidden risks of personal loans
Personal loans come with high interest, extra charges, and penalties for late EMIs. Missing payments can also hurt your credit score, making it harder to get loans later. Always borrow carefully and only when needed.