Are you planning to take a personal loan in Delhi? If so, there are a couple of factors that you need to focus on. Apart from the personal loan interest rate, you need to check the hidden charges imposed by various loan providers in India. The best way to avoid the charges is by doing extensive research and going through the loan agreement very carefully. It is important that you keep your instant personal loan online affordable by avoiding the hidden charges implied by banks and non-banking companies. Let us take a look at some of the popular hidden charges and how to avoid them.
Popular hidden charges on personal loans
The login fee, or application fee, 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. It is not refunded. If your loan is approved, you have to pay the processing fee. However, the application or login fee needs to be paid by every individual when they do personal loan apply. For approval, there is no fee. But, when your loan is approved, you need to pay a processing fee as charged by your respective financial institution. These judges are always hidden by financial institutions. It is important for you to do your research well so that you are able to avoid them.
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. Sometimes, banks charge you a fixed rate, and oftentimes you just need to pay the balance rate of interest for the closing months of your tenure. It is important to take notice of the prepayment charge before choosing your loan provider.
It is also popularly known as a “part prepayment charge” and is charged by the banks or non-banking companies. This is applicable when the loan borrower decides to repay a large portion of the principal loan amount before the loan tenure. Again, banks can go for a fixed or floating rate in the case of a partial prepayment charge.
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 housing loans. These charges are applied when you do not make the monthly instalment payment by the due date. The percentage can reach something between 3 and 4% of the amount every month when you delay your payment.
Conversion charges are applicable to personal loan borrowers when they try to switch from a floating interest rate to a fixed interest rate. Since a personal loan is a long-term loan, borrowers may decide to change the type of rate of interest. These fees are entirely dependent on and differ from one loan provider to the next.
If you want to change the repayment method or dates, you must pay this fee. It’s generally Rs. 500 per request. However, these charges are also dependent upon the loan provider that you choose to borrow from. It is not a very common charge, so you need to be alert if your loan provider is charging the same.
Recovery charges are also known as collection charges, which are charged by the bank or non-banking company when an individual defaults on loan EMI. When your credit loan account goes into default, the recovery charges are charged by the banks.
The insurance premium of a personal loan is a hidden judge that you need to take care of at the time of taking the loan. This is done by the banks to recover the defaulted (or lost) amount.
How to avoid hidden charges?
- Investigate thoroughly: Hidden fees can make your loan very expensive. It becomes crucial to research and then take 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. Therefore, it is important to research all the available loan providers so that you can finally get the right one.
- Read the loan agreement: 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. Loan agreement is a blueprint of your loan and will have every hidden charge involved in it.
Make sure you are careful about the hidden charges at the time of the personal loan apply process. In order to get an affordable personal loan in Delhi, make sure you choose the right affordable personal loan interest rate.