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Know First, Owe Later: Why Financial Literacy Should Come Before Borrowing

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Ever signed a loan document or swiped your card without really knowing what you were getting into? If yes, you're not alone. According to a SEBI survey from 2023, nearly 76% of Indian adults lack basic financial literacy — a number that’s especially worrying given how rapidly digital lending and investment options are growing in the country.


We don’t talk about money nearly enough, and when we do, it’s often only after things go wrong — when we’re hit with an unexpected charge, a bounced EMI, or a loan rejection we didn’t see coming.

In a country where credit and investment products are evolving faster than our collective understanding of them, financial literacy isn’t a luxury — it’s a survival skill. Let’s take a closer look at why.


Why Financial Literacy is More Than Just a Buzzword

In simple words, financial literacy means knowing how money works in your life. How you earn it, where you park it, what you do with it, and more importantly, how it can either help you grow or drag you down.

Think about this: India’s fintech ecosystem has exploded over the past few years. It’s never been easier to get a loan, sign up for a mutual fund, or apply for a credit card. But with that convenience comes complexity — the fine print, repayment terms, processing fees, interest rates. Without knowing how to navigate all of it, you’re basically driving blind.


Take the Buy Now, Pay Later (BNPL) trend that’s picked up in India. Many users don’t realize that missing a repayment can damage their credit scores. Similarly, how many of us actually read the terms before converting a purchase into a credit card EMI? Hidden charges, interest slabs, and pre - closure penalties can silently pile up.


That’s why both the RBI and SEBI have been pushing for better investor and borrower education. Poor financial awareness often leads to poor decisions: high-interest debts, wrong investment products, and missed opportunities. A bit of knowledge can go a long way in protecting your hard-earned money.


Know Before You Borrow: What Every Indian Should Ask

Let’s face it — borrowing money is a part of life. Whether you’re paying for your child’s education, covering a medical emergency, or just managing cash flow for your business, credit can be a useful tool. But only if you know what you’re getting into.


In India, we generally borrow in three broad ways: unsecured loans like personal loans and credit cards, secured loans like gold loans or Loans Against Mutual Funds (LAS), and flexible credit lines. Most of us compare loans only on the basis of interest rate. But here’s the catch: what you really need to know is the total cost of credit. That includes interest, processing fees, GST, pre-payment charges, and any hidden clauses. And then there’s the credit score factor. Your CIBIL score can make or break your loan application. Sadly, many borrowers face rejection simply because they’re unaware of how their repayment behavior affects their score.


That’s where products like Quicklend’s Loan Against Mutual Funds come in handy. Unlike personal loans, LAS is a secured option with a lower interest rate and no need to sell your investments. You get liquidity when you need it, without disrupting your portfolio’s growth. It’s this kind of clarity and simplicity that every borrower deserves. And the first step is always to ask the right questions.


When Investing Goes Wrong: How Literacy Protects Your Money

Many investors in India make their first investment based on a tip from a friend, a trending YouTube video, or a social media influencer’s post. It feels accessible, quick, and easy. But when the markets dip — or when returns don’t meet expectations — panic sets in.


That’s often because the basic questions were never asked: What kind of fund is this? What is the risk profile? How long should I stay invested? Equity mutual funds, for example, are designed for long - term growth, and short-term volatility is part of the journey. But without that understanding, even small market corrections can lead to hasty decisions.


Financial literacy isn’t about becoming an expert. It’s about taking a step back, learning the basics, and making choices that align with your needs and risk appetite. Understanding your investments also helps when you're trying to raise funds. If you know your mutual fund values and lock-in periods, taking a loan against them becomes much easier. And remember, not all advice on the internet is good advice. Learn, verify, and then invest.


Building a Financially Literate India: Where Do We Start?

Financial literacy doesn't need to start with textbooks or weekend seminars. It begins with small, mindful actions. The next time you get a loan statement, read it line by line. If you're considering a credit card, look beyond the flashy offers and check the APR, late fee, and cash advance rates. When you're exploring investments, start with basics — what type of fund is this, how risky is it, and how soon will I need this money back?


You can also use trusted tools and platforms. The RBI, SEBI, and AMFI websites have reliable resources. Fintech platforms like ours offer blogs, FAQs, and even chat support to help explain credit concepts in plain English. And if you're ever in doubt, speak to an advisor. A five-minute conversation can sometimes prevent a five-year mistake.


We Owe It to Ourselves to Know

Here’s the truth: You don’t need to be a CA or a stock analyst to make good money decisions. You just need to be aware, ask questions, and never feel ashamed to say, “I don’t understand this yet.”


The more you know, the less likely you are to make costly errors. That’s not a tagline — it’s a fact. So if you’ve been putting off understanding your credit card bill or you’ve never really figured out how your mutual fund works, now’s a great time to begin. Start small. Start today.


This is general guidance. For personalized loan advice, contact our team at Quicklend.



Author Arun Jadhav
Published 18 July 2025