In recent times, there are number of popular and convenient loan schemes in the market. These financial tools offer greater flexibility to the customers which make it an easy to go funding option for population of India. Being categorized in secured and unsecured form of credit solutions , therefore lender requires to meet some basic eligibility criteria and agree on terms and conditions related to loan application.
However, in some situations when you "Apply For Loan" there might be some hidden charges involved that can turn into debt burden over a period. In this article, we will talk about several forms of hidden charges on loans and some remedies to avoid these charges on unsecured form of loan which are free of collateral and at higher risk to default by the borrower. Let’s, find some top of them:
- Penalty for late repayment: As the name indicates a late repayment penalty is levied on borrower by the lender when he/she doesn’t pay their monthly installment on time or defaults on their EMI amounts. In such circumstances the lending institution charges a late repayment penalty from the borrower which usually ranges between 2-3 percent of the loan amount along with GST.
- Prepayment charges: Usually when a borrower is rewarded by incentive from company, he /she want to use that money to partly or fully prepay the loan amount to reduce the monthly installment and rate of interest. However, some of the lenders do not provide this facility before a certain period but if you want to foreclose the loan or want to make pre-payment, they impose penalty on you.
- Processing fees: This charge is levied by the lender to cover all the costs related to approving your loan and its disbursal. It is very common in loan procedure and the amount is fixed percentage which is intimidated to the customer before they "Apply For Loan Online" or offline. This all adds up to the total cost of availing of a loan.
- Balance transfer cost: This process means for transferring your outstanding loan amount from your existing lender to a new lender at easy terms and conditions. It is more comparable to making a pre-payment; your existing lending institutions may impose some penalty to transfer your loan account to a new lending institution and gives you a no-due certificate.
Hence, you know the different types of hidden charges on unsecured loan that lenders levy but you have to avoid it by reading the terms of loan carefully, planning your repayments, availing a loan from reputed lender as well as stay aware of various fee types. Therefore, just by keeping all these things in mind and performing due diligence while signing a loan application, you can avoid these types of hidden charges on your loan to enjoy hassle free loan process.
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