What are the hidden charges? How Can You Avoid Them?

Are you planning to take an instant personal loan online? If so, there are a couple of factors that you need to focus on. Hidden charges often make your personal loan very expensive. Therefore, it is important to compare the loan providers on the basis of the hidden charges imposed by them. Let us take a look at some of the popular hidden charges and how to avoid them.

Popular hidden charges on personal loans

Login fee: This is the fee for logging in or application fee, which is a very common fee that your loan provider may not tell you about directly. It is also known as an "administrative fee" that banks or non-banking companies will charge even before the personal loan is approved.

Prepayment charges: The prepayment charges, also known as "foreclosure charges," are given by the borrower at the time of closing the loan before the loan tenure. This is a very common hidden charge that banks or non-banking companies charge eventually when you close your loan before the loan tenure. The foreclosing charges can be floating or fixed as decided by your financial institution.

Part prepayment charge: This is applicable when the loan borrower decides to repay a large portion of the principal loan amount before the loan tenure.

Late Payment Fee: Late payment charges on personal loans are very common. It is important for individuals to know about this hidden cost, as it can become very expensive later on. Late payment charges are also known as penalty interest rates on loans. These charges are applied when you do not make the monthly instalment payment by the due date.

Conversion Charge: Conversion charges are applicable to personal loan borrowers when they try to switch from a floating interest rate to a fixed interest rate.

If you want to change the repayment method or dates, you have to pay this fee. It’s generally Rs. 500 per request.

How to avoid hidden charges?

Investigate thoroughly: hidden fees can make your home loan very expensive.It becomes crucial to research and then takes the right loan from the best loan provider. As you compare the rate of interest, you also need to focus on hidden charges as well. There are various hidden charges which actually make your loan expensive. Therefore, it is important to research all the available loan providers so that you can finally get the right one. Every time you compare, focus on the hidden charge section. This will help you choose the right loan without any difficulty from expensive hidden charges that make your repayment difficult.

Reading the fine print of a loan or loan agreement is one of the best ways by which you can get to know the hidden charges imposed by your loan provider. The charges that are not clearly stated by the loan provider are known as "hidden charges". After approval, when you get the loan agreement, you need to be very careful. The loan agreement is a blueprint of your loan and will have every hidden charge involved in it. This can help you understand the hidden charges that your loan provider is going to charge you.

Wrapping up

When you take an instant personal loan online, you need to take care of hidden charges along with the personal loan interest rate. Get a smooth personal loan apply process when you go for a personal loan in Delhi.

Financial Analyst at a leading lending firm in India with 15+ years of experienced in providing advice on instant personal loans and home loans in India.