In an ideal world, everyone would have infinite money. However, the reality is far from that; hence, every penny matters. This is especially true for a personal loan, where you might have to deal with unnecessary charges if you don’t pay due diligence.
Yes, lenders will charge you a loan processing fee, but there might also be hidden charges on loan foreclosure, loan cancellation, prepayment, same paperwork, and so on. Well, good for you, such additional costs are easily avoidable.
Wondering how? Read on.
Choose a lender with care.
When choosing a lender, you should inquire about all the additional charges associated with the loan product. Apart from personal loan eligibility terms and interest rates, it would be best if you look out for tasks such as:
- Loan cancellation charges
- Post-dated cheque charges
- Part-payment charges
- Foreclosure charges
If not, you’ll’ probably end up paying more for such additional charges, which you could’ve’ avoided with the right lender.
This is why you should read the fine print carefully before saying yes to a loan offer. If necessary, you may also ask your chosen lender for a list of additional and hidden charges.
Don’t’ change repayment modes frequently.
Did you know switching between repayment modes can attract a penalty? Why, yes! If you change your EMI payment modes frequently during the loan tenure, such as from auto-debit to cheque, you’ll incur an extra charge. Thus, it would be best to stick with one personal loan repayment method since the beginning of the tenure.
Avoid canceling your loan.
Say you’ve’ chosen a lender with favorable personal loan interest rates and applied for a loan. After it is approved and disbursed, you cancel the loan for some reason. What will follow is the lender levying a hefty cancellation charge with additional GST charges over and above that. Yes, lenders will charge you a cancellation fee. Also, some lenders don’t refund the processing fees either.
So, if you want to avoid such extra costs, do a thorough research of the associated charges on the loan.
Apart from these, you should also make sure you don’t’ lose key documents (bank statements, NOCs, CIC reports, etc.), as lenders can charge you extra for providing duplicate documentation. While additional charges will differ from one lender to another, they are easily avoidable if you’re careful since the start.
So, before you apply, make sure to compare different lender offerings, use a personal loan EMI calculator to estimate your monthly liabilities, and see who’s providing the best terms and reasonable charges. This way, you won’t end up in a pickle later on.