People can successfully get over financial difficulties when they have quick access to funds. A personal loan can help a borrower meet several expenses. Having quick access to these loans will enable you to get over your financial problems.
Ensure you rely upon a trusted lender and fulfil the eligibility criteria. Being financial products, obtaining these unsecured loans requires a borrower to bear a set of costs. Besides the interest on the acquired loan, paying hidden charges becomes vital.
What are the Typical Hidden Charges in Personal Loans?
It is of utmost importance to become aware of the hidden costs clearly before you obtain personal loan. Here’s what nearly every loan provider charges, aside from the overall interest.
Fees for Loan Processing
The processing fee is among the most prevalent unstated expenses linked to personal long-term and short-term loans in India. The loan provider uses the fees for loan processing to bear the overhead costs related to loan application handling. Not every lender charges the same fee for loan processing.
Prepayment Fine
If you choose to pay back your loan before the agreed-upon term, most lenders charge prepayment penalties. These fines help safeguard the lender’s interests as they forfeit their possibility of receiving further interest payments.
It’s important to review the terms and circumstances of your loan agreement to determine the precise charges. You must do so even when you find lenders who don’t charge prepayment penalties.
Late Payment Penalties
Every loan provider will require you to pay a certain amount as a fine if you make late monthly payments. Again, the late payment fees will differ from lender to lender. Your overall loan cost will shoot up if you repeatedly make payments after the due date. Avoiding these penalties is possible if you don’t fail to make timely payments every month.
Charges for Attesting Documents
You will be required to submit various crucial documents along with your loan application for a home construction loan. A loan provider needs documents like address proof, income proof and bank statements. It becomes necessary to bear additional costs if the lender you select charges for notarising or attesting documents.
Stamp Duty
You will have to pay a specific amount as a tax to the government for the loan agreement. The government charges stamp duty on such legal documents. The stamp duty price differs from one state to another.
Moreover, it’s a certain percentage of the amount you borrow from a bank or online lender. Consider the stamp duty fee when calculating the total cost, you will have to bear to pay off your loan.
Charges for Insurance Policies
A lot of loan providers who keep looking for different avenues to increase their revenue sell insurance policies. Many compel applicants to buy accident insurance or life insurance to obtain an instant cash loan. Indeed, these policies prove helpful in ensuring financial safety during unwanted events. But, these extra charges will increase your loan’s overall cost.
Best Ways to Minimise Hidden Charges
Here’s what you should do to ensure you can reduce the hidden costs of personal loans.
- It is essential to make a comparison of all offers that you get from different lenders.
- Carefully review the terms and conditions of the loan agreement.
- You will qualify for a reduced interest rate and better terms of loan if you maintain a good credit score.
- Automate your monthly payments to avoid paying fines for missed or untimely payments.
It’s absolutely fine to look for alternatives to personal loans to avoid paying hidden charges.
Final Words
The aforementioned ones are the common hidden charges you will have to pay to secure personal loans. You must take proactive steps to bring down the hidden costs. Choose lendingplate to obtain an instant loan online. The reputed lender doesn’t charge prepayment fines. Your overall personal loan cost won’t go up if you rely on this online loan provider.
**’The opinions expressed in the article are solely the author’s and don’t reflect the opinions or beliefs of the portal’**