Personal loans are suitable for basically anything – well, almost. Even though personal loans seem to advertise themselves as a loan for anything under the sun, here are a few situations in which you should not take out a personal loan.

High-risk expenses

Do you require a personal loan to cover a potentially risky expense? Doing so under these circumstances could land you in hot water!


Personal loans are loans that can be taken up for whatsoever purpose, including gambling.

Despite how you’ll still be able to get a personal loan for the express purpose of gambling, getting a personal loan for such a purpose is not condoned by most loan providers!

We don’t have to tell you about the dangers of gambling as it’s already very well known. Just keep in mind that if it starts to interfere with your ability to maintain and/or improve your credit score, you'll be less likely to be able to obtain a personal loan or at least one with terms that are favourable to you in the next time around.

Certain investments

Taking up an investment can be a good way to grow your cash and at times one might consider taking up a personal loan for it.

However, given the current state of the markets, which is made worse by factors such as the pandemic and the ongoing Russian-Ukraine conflict, the markets are very likely to deliver a 'high-cost, low-reward' outcome as a result of market volatility. Unless you have a solid investment strategy in place, taking out a personal loan solely to invest in assets with unpredictable returns (such as crypto, meme stocks, NFTs) may be a bad idea right now.

Make sure you understand the risks before taking out a personal loan to invest and don't buy more than you can afford to lose. To avoid getting into crippling debt, make sure you can afford to pay off your credit if your investments fail!

Illegal activities

It is common knowledge that banks and other credit issuers will not approve of having a personal loan to fund illegal activities.

Did you know, however, that if you are suspected of borrowing money for such purposes (especially money laundering and terrorism), financial institutions are required to report you to the authorities?

Not only will you be denied a loan, but you may also find yourself in serious legal trouble.

If you already qualify for another loan product

Do you need a personal loan to pay for school, buy a house, a car, or start a business? It's a good idea to look for specific loan products with financial institutions that already offer them if you're looking for a loan for the aforementioned purposes.

Loan products for specific needs typically have lower interest rates and shorter repayment terms. Even though obtaining a personal loan is likely to be easier and faster, you should first research and compare other options.

Before you sign off on a personal loan, make sure you compare your options to ensure you're getting the best loan product for your situation. Waiting and putting in the effort to obtain such a loan may be worthwhile, especially if it's a specific one!

If you can’t afford the loan repayment

Can’t afford to start paying off on your personal loans immediately the month after you sign off on one? You might want to stay off from getting a personal loan as you will be penalised if you fail to pay on time.

Each personal loan contract is unique and may have different repayment terms, but the bottom line is that they must be paid for right away and on a regular basis. We at Lendela have written an in-depth article on how to determine whether you can afford the repayment terms.

When you’re at risk of being scammed

Did you know that scams currently make up about 40% of crime in Singapore? This should make you more on guard if you're ever asked to send a large sum of money to anyone or for anything, especially if you feel obligated to give these con artists money you don't have, such as by applying for a personal loan.

Financial institutions generally trust their lendees with personal loans and may not ask for the reasons for borrowing, so it is up to you to determine if you are being duped out of your money.

Due to the high prevalence of scams in Singapore, the authorities have created a helpful website to assist people in determining whether or not they have been conned into one.


No, we're not here to persuade you not to take out a personal loan. If anything, we at Lendela want to assist you in making informed personal loan decisions before you sign on the dotted line, making your repayment journey easier.

Feeling confident that you do not meet the aforementioned criteria, or that you will meet your repayments on time? Begin your personal loan journey with Lendela and receive multiple loan offers from banks and credit issuers in one step.