It is easy to take personal loan, paperwork is fast and money comes directly into account. But there are many hidden expenses behind it, which people do not guess. Seeing the EMI and interest rate, it seems easy to take a loan, but the remaining charges of the bank later increase the cost. Today we tell you about the hidden expenses related to personal loans, which less people know.
Cut before getting a loan
Most banks and NBFC charges 1% to 3% of the loan amount. This money is deducted as soon as the loan is received. For example, took a loan of 5 lakhs and fees are 2%, then you will get only 4.9 lakh, but repayment will be 5 lakhs. That is, the amount decreases in the beginning.
Penalty for early repayment
If you want to repay the loan before the scheduled time, it will also cost. This is called prepament or foreclose charge, which can range from 2% to 5% of the outstanding amount. Therefore, first calculate whether the savings will be more or charge by early repaying.
Delay or EMI bounce fine
If the EMI does not repay on time or the check/auto-debit bounces, then the bank can impose a fine of 500 to 1,000 rupees. This not only puts a burden on the pocket, but the credit score can also deteriorate. It is better to keep enough money in the account before the date of EMI.
Hidden expenses of insurance
Many times banks add policy like personal accident cover or loan protection insurance with loan, which is not mandatory. Interest is also charged on this premium. If you have the right to take it or reject it, then ask clearly before signing the loan.
Additional burden of GST
Processing fees, late payment penalty, and foreclosure charge – 18% GST is also levied. That is, the total expenditure increases further by connecting tax separately on every fee or penalty. Do not take a loan by just looking at EMI, put all these expenses in advance.
What to ask the bank?
Before taking the loan, ask the bank some important questions so that there is no problem later. Ask how much processing fees are, because it can increase the cost of the loan. Also clear what are the foreclosure charge, that is, how much will be the punishment for repaying the loan quickly. Also, ask that no insurance is being linked with the loan. And yes, how much GST will take, also clear it in advance.
Security in prudence
Personal loan can give relief in difficult times, but the loan taken without complete knowledge can put you in the affair of debt. Keep an eye on EMI and interest rate as well as hidden charge. Only then the loan will be beneficial for you. The correct information and thought-taking loan really helps.