A personal loan is one of the most preferred options preferred by many to deal with a financial emergency. It includes the need for money for marriage, medical emergencies, planning a sudden vacation trip, home renovation, furnishing, debt consolidation, or something urgent. While taking a personal loan in your region, you should be aware of various hidden and unhidden charges incurred by your lender. For instance: if you are searching for the changes and hidden fees for personal loans in Gurgaon, then you will get many options based on your city locality. The bank and the financial institution sometimes don’t tell you the hidden charges and loan processing fees, but they cut it with your EMI. To avoid such surprises, you should abide by the guidelines of your lender or the bank.
In this blog, we will let you understand some of the hidden and unhidden charges levied by your banks.
What are Processing Fees and Other Charges?
Every Personal loan has a specific repayment term and loan amount, which you need to repay the same in a particular period. Salaried persons can easily avail of loans as they have maintained the liquidity of money, but many fees and processing charges need to be paid to the lender or the bank. It includes foreclosure charges or prepayment charges, processing fees, and other due date charges. It affects the CIBIL score and your creditworthiness as a whole. So, it becomes very necessary to check each and everything in detail.
Top processing fees
When getting a Personal Loan, one of the most debated fees is the processing charges. It’s the fees levied by the bank or the lender concerning the processing of your loan amount till the disbursement procedure. This fee is charged for the paperwork and other clearance done for your loan. This fee may vary from one lender to another. It can range between 0.5 to 2.5%. Persons taking loans need to pay this loan as per the policy of the financial institution. Sometimes it is deducted by the bank at the initial stage or incurred with the loan amount at a later stage with EMI.
Loan Validation or Verification Fee
The validation or verification process is one of the most crucial stages during the sanctioning of the loan on a particular interest rate. In verification, the respective bank or the institution checks whether the individual can pay the loan amount in a particular specific tenure. Most of the time, this activity is done in-house but sometimes, they outsource with their agents and service partners to perform verification jobs. They check for loans credit payments or past financial activities with the credit score. This entire activity needs fees incurred by agents or banks which are known as verification or validation charges which are completely borne by the applicant.
Goods and Services Tax (GST)
One of the most important taxes is the GST. From its inception, GST is levied and incurred by the banks from the applicant and borrower. It’s a separate tax alongside the processing and other charges. This tax is levied in respect of the services used by the applicant in the bank or their respective agents. The borrower should pay the charge either at the time of repayment of his loan or when the loans are sanctioned with paperwork. You can check the rate of GST for loans in your area. Suppose, you live in Gurgaon or anywhere in Delhi NCR, you can check “GST on Personal Loan in Gurgaon” etc.
Penalties for Missed EMI or in Default Case
EMI means Equity Mothy Installments which need to the repaid every month with the loan amount and a fixed interest. The borrower needs to pay his respective EMI on time to avoid penalties and default case charges. In case the borrower fails to do the same, the bank handed over a notice to him either offline or online, and the person becomes a defaulter against his loan amount. In this case, he/she needs to pay the EMI defaulter charges.
Charges for Personal Loan Foreclosure
If the borrower needs to repay their loans before the scheduled time or tenure, he/she will not be liable to get a particular benefit on the interest rate from his bank. It is called the foreclosing of loans which are expected to happen at before the date of the loan EMI. In this case, a separate fee ar incurred by the banks and the lender. It may range between 2% to 4% of the total loan amount with the interest rate.
Summary
Personal Loans are very necessary in dealing with financial issues, weddings, home renovations, any medical emergency, debt consolidation etc. The applicant must know the hidden and unhidden charges that banks and financial institutions don’t reveal. Some of them are duplicate statement charges, personal loan foreclosing fees, GST, penalties on late payments and so on.
