How To Avoid Hidden Charges When Getting Personal Loan
When you're in the market for a personal loan, it's important to be aware of all the potential charges you could face. Unfortunately, some lenders try to sneak in hidden fees and charges that can end up costing borrowers a lot of money. They may charge you for things like origination fees, application fees, and more. Therefore, it's important to read the fine print so that you know what to expect before signing any paperwork.
In this blog post, we will discuss how to avoid these charges and get the best deal on your personal loan.
Always avail a personal loan from a reputable lender
The first and foremost step to avoiding personal loan charges is to identify a reputable lender. There are many personal loan lenders in the market, but not all of them are created equal. Some may have hidden fees, while others may be more upfront about their charges. It's important to do your research and read reviews before choosing a lender. This way, you can be sure that you're getting the best deal possible.
Another thing to remember is that some lenders may offer promotional rates with certain conditions. For example, they may waive the origination fee if you sign up for auto payments from your checking account. Be sure to ask about these promotions so that you can take advantage of them!
Finally, remember that the best way to avoid hidden charges in personal loan is to be proactive and ask questions. If you're not sure about something, then don't hesitate to ask the lender for clarification. This way, you can be sure that you're getting the loan that's right for you.
Read the loan document carefully
The next step to avoiding personal loan hidden charges is to read the loan document carefully. This document will outline all of the fees and charges associated with the loan.
Pay close attention to things like origination fees, application fees, and prepayment penalties. These are just some of the potential charges you could face, so it's important to be aware of them before signing on the dotted line. Moreover, make sure to ask about any fees that you don't understand. The last thing you want is to be surprised by hidden charges along the way.
If everything looks good and you're comfortable with the terms of the loan, then you can go ahead and sign the document. Remember, once you sign the loan document, you agree to all of the terms and conditions outlined therein. Therefore, it's important that you take your time and review everything carefully before signing.
Cleverly plan your EMIs
The final step to avoiding hidden charges with personal loans is to plan your repayments cleverly. Many lenders will charge a penalty if you prepay your loan, so it's important to factor this into your planning. If you know that you'll have extra money sometime in future, then you can make smaller EMIs leading up to that point. This way, you can avoid the prepayment penalty and save yourself some money in the long run.
What are the Different Types of Fees Charged?
Interest rates are calculated based on the cost of the loan to the lender and the credit risk evaluation of the loan applicant. The following factors affect the personal loan interest rates.
Origination Fee:
This is a fee charged by the lender for processing your loan application. It is typically a percentage of the total loan amount and is paid at closing.Application Fee:
Some lenders charge an application fee to cover the cost of processing your loan application. This fee is typically paid upfront when you submit your application.Prepayment Penalty:
Many lenders charge a penalty if you choose to prepay your personal loan before the end of the term. This penalty can be a percentage of the outstanding balance or a flat fee, so it's important to check with your lender beforehand.
While these are some of the most common fees associated with personal loans, there may be others depending on your individual loan agreement. Be sure to review your loan document carefully so that you're aware of all potential charges.
Conclusion
By following these steps, you can avoid hidden charges when getting a personal loan. Remember to shop for the best rates and terms, read over the loan document carefully, and cleverly plan your repayments. By doing so, you can ensure that you're getting the best possible deal on your personal loan.
DISCLAIMER
The information contained herein is generic in nature and is meant for educational purposes only. Nothing here is to be construed as an investment or financial or taxation advice nor to be considered as an invitation or solicitation or advertisement for any financial product. Readers are advised to exercise discretion and should seek independent professional advice prior to making any investment decision in relation to any financial product. Aditya Birla Capital Group is not liable for any decision arising out of the use of this information.
