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While borrowing any type of loan like a personal loan or a secured loan. No matter you are applying for a Business Loan in Bangalore or a personal loan in Mewat, or Delhi, you need to be aware of several types of loan-related agreements. If you use the personal or business loan, you need to pay a particular amount as debt to your bank on a fixed monthly date. For a missed debt repayment or breach of any terms, your lender or banking authority can levy charges or some fee on you in the name of penalty charges due due payment fees etc. These fees are not mentioned openly and thus they are called as “Hidden Charges.”
Personal loans provide a viable opportunity to tackle several types of financial issues. Every loan has some hidden charges and fees which to be paid by the borrower at a certain point in time.
You need to check every parameter to tackle situations of financial risks.
Here, in this blog, we are going to describe to you how you can easily avoid hidden changes on loan agreements, but first know what is hidden charges:
Hidden Charges Levied by Banks
Banks and financial organizations levy some hidden fees and charges. Unfortunately, these hidden penalties or charges are added to their respective monthly instalment without informing them regarding the same. Your bank may show various reasons for levying these charges like defaulter of the loan amount, cancellation of services, the start of a new scheme, offers, missed repayment, or any other reasons. In order to avoid the circumstances, you need to be aware of various things and make your decision very wisely by ready every detail of the terms and conditions.
Steps to Avoid Hidden Charges
Prepayment or Missed Payment Penalties
There are several types of penalties levied by the banking organization. It includes pre-payment and missed payment penalties. When the borrower pays off their EMI before the agreed date and time which are made and signed through an agreement, he/she will be charged. On the other hand, if the borrower misses any repayment of his/her debt, the bank will charge for missed payment dues. The basic motive of such hidden charges is to provide compensatory allowances to the bank in case of missed payment or any other issues related to your loan.
Duplicate Documentation Penalties
When you show your lender or bank duplicate documents when they want the original one, you may be charged or fined with appropriate financial laws. Whether you have taken a business loan in Bangalore or a personal loan in Gujarat, you will be charged according to the penalty laws you have signed your agreement. When your bank requests genuine copies of your loan documents and you provide duplicates of them, your bank will initiate charging you with heavy penalties or small ones that fit the circumstances.
Processing Fee
Some banks levy processing fees from the borrower and they calculate it from the start of the loan application process to the final stage of disbursement of your loan amount. You may be aware of several things but they charge you in the name of processing fee. A small mistake will lead you to problems as banks have the authority to charge them in case of any fraud or misuse of the terms of your loan agreement.
Cancellation Charges
If you have borrowed a personal loan and don’t want to continue it longer, you must want to get it cancelled. Most of the banks negate it which will affect your credit score too. They charge you several types of penalties with interest. Suppose, if you want to cancel your application for the loan or withdraw your candidature from their list of prospective customer for the loan, your bank may charge some penalties in the name of cancellation charges.
You can easily avoid these charges by reading and knowing their terms and conditions in advance.
Summary
Hidden charges are very popular in loan agreement as they are not disclosed by the lender at the time of loan application. They charge you or fine you in various circumstances like missed payment, late payment, false documentations, cancellation of your loan etc.
