Acquiring funds through a loan is the most convenient way to come out from situations where you have to face a cash crunch. Certainly, a personal loan is always the most reliable option that people look out for when they need to borrow some funds from elsewhere. These loans offer quick financial and flexibility to borrowers to meet their financial commitments without a fail. Perhaps, this is why personal loan
has become a go-to option for millions of people out there in India.
Since the loans are unsecured in nature, bankers will look into certain factors while approving your loan request. And, banks also have to agree to certain conditions before they approve you for a loan request. When people are desperately looking for funds, they always look forward to meeting the eligibility criteria. In most cases, they forget about the hidden charges involved which in turn can end up putting a burden on your head over a period.
So, if you are looking out for a personal loan, the first thing you must consider is the hidden charges involved and then, apply. But, how do you avoid hidden charges? Well, you don’t have to worry as we will discuss several forms of hidden charges that banks charge on loans here and how you can avoid them.
So, let’s dive deep into the guide.
Hidden Charges on Personal Loans
Below are some common forms of hidden charges on loans:
• Late Payment Penalty
This is cleared by the name that the banks will levy a fee when the borrowers don’t pay the EMIs on time. Making late repayments or defaulting on EMIs is the most common reason why banks charge late payment penalties.
• Pre-Payment Charges
People are generally unaware of these kinds of charges and make pre-payments to save on interest rates. However, this approach is not at all a lucrative action to take. This is why you must when you can make pre-payments without any charges and until then, pay your EMIs in a timely manner.
• Processing Fee
When banks approve you for personal loans, they charge a processing fee to cover the expense of approving your loan request and its disbursal. It is a fixed and common charge. However, some banks may charge extra in the name of service charges and put a financial burden on your shoulder.
• Balance Transfer Cost
This sounds like a lucrative deal. However, a balance transfer is not at all something on which you can actually save a big amount as there is a balance transfer cost involved. You will be charged a certain penalty to transfer your existing loan to a new lender.
• EMI-Bounce Charges
Some people might have not heard about this type of charge before. However, the EMI-bounce situation occurs when you don’t have sufficient balance in your account. And in such cases, the lender bank will charge some fee on it.
So, these are the hidden charges that you must be aware of when applying for personal loans.
Ways to Avoid Hidden Charges on Personal Loans
Now, you are aware of the hidden charges that banks apply in certain situations and you can’t do anything about it but make efforts to avoid them. Wondering how you are going to do it? Well, we describe some ways to avoid hidden charges on personal loans. So, stay tuned.
• Read the Loan Documents Carefully
This is the first precaution that you must take when applying for personal loans. While availing of personal loans, reading the documents carefully is always the smart way to make things clear.
• Plan Your Repayments
Planning your repayments according to your repayment capacity is the most convenient way to avoid defaulting on EMIs. This way you can avoid late payment penalties and eject the burden of finance from your head.
• Avail Personal Loans from A Reputed Bank
You must look for a reliable bank when applying for personal loans. Make sure you read the lending policies carefully and meet the application process as per the lender’s terms. Moreover, you can reach out to a reputed loan advisor that helps you throughout the loan procedure and keep you away from such troubles.
• Make Yourself Aware of Different Fee Types
Last, but not least, make yourself aware of the different fee types involved in a personal loan. If you know about the different fee types before you avail of personal loans, it will become somewhat convenient for you to avoid hidden charges and make the loan affordable.
When you find yourself in a dire situation where you need funds desperately, you will seek a personal loan to avoid the troubles. However, hidden charges can make the situation worst and this is why it is always better to avoid the hidden fee. So, keep this guide in mind and look for ways how you can avoid the hidden charges on personal loans. This is the only way to make personal loans useful and beneficial in a time of need. Moreover, consider a bit of caution while availing of personal loans as this will help you bring your financial life back on track.