What Hidden Charges Should You Expect with Personal LoansPersonal loan is a safe choice as many aspects related to personal loan are easily available online that borrowers can know before hand and stay updated with loan formalities. Fixed interest rate, EMIs, loan status etc. are clarified initially for no discrepancy during the repayment stage. Despite of the transparency, certain financial institutions levy a minimum processing fee or might have miscellaneous hidden charges. It is advisable to discuss about hidden charges, if any.
Hidden charges on personal loan are a part of security from the lender’s side. In case, borrowers are unable to repay the loan timely, then the lenders are enforced to levy certain taxes and charges on such personal loan applications. Hence, before you apply for a personal loan, do read the terms and conditions clearly for hidden charges at any step. Besides, it is always better to straight away ask about hidden costs on loan with your loan manager or lender.
Below are certain reasons for incurring personal loan charges you should check before applying or signing up:
- Loan Processing Charge &Taxes – This is the most common hidden fees and tax (GST) that generally shows up duringthe ongoing loan process. These are some administrative fees for processing and sanctioning the personal loan. This is usually a small amount starting from 1% - 2.5% either charged upfront or is deducted from the total loan amount when the loan amount gets disbursed. The fee is generally non-refundable and may vary from lender to lender.
- Cancellation Charges – This is a basic charge deducted for cancelling any kind of service availed. Be it train, flight, hotel booking or personal loan. Once the approval or disbursal is carried off, and if you wish to cancel a personal loan you may have to pay cancellation charges, which may vary from lender to lender. Some lenders charge a flat rate including 18% GST.
- Verification Charges - Before approving the loan application, lenders check on the borrower’scredit history, whether you have the capacity to repay the loan on time. For this the Credit Bureau of India probes into individual credit information and sell it for a fee to lenders. Since this is an additional cost that affects the lender, it isadded as a verification fee.
- Pre-payment Penalties – If you plan to repay the personal loan amount before the fixed tenure there will besome penalty charges applied. Pre-payment charges are levied to recover the missed interest value due to foreclosure.
- Delayed Payment Charges - Late payment charges are the most common issue that a borrower confronts with personal loans, credit card payments and other debt issues. Delayed payments not only affect your credit score but also force penalty charges.
- Duplicate Documentation Charges - Lenders or financial institutions may charge certain fee for generating duplicate statement of schedule for payment and outstanding balance of the loan. This duplicate documentation charges generally ranges between Rs.200 – Rs.500.
Even with some percentage of hidden charges, applying for personal loan proves to be of great support in times of financial emergency via their cash loan apps. The hidden charges are minimal and do not increase the load of repayment.