Nowadays the banks are giving out loans very easily to everyone and at very low interest rates. This low interest rate makes the whole deal look so lucrative on paper that more often than not the customers fall for it. They however fail to realise that there are many hidden loan charges which in the future can make the loan cost more expensive. So it is important for you to be aware of these hidden loan charges in order to be able to avoid them and get a fair deal.
Not just APR
You will find that more often than not the repayment cost is more than the annual percentage rate you are informed about. Hence when taking a loan you need to keep these points in mind. The lender or the bank will not inform you of all the hidden charges as that is how they tend to earn profit. So it is important for you take all the details and charges into consideration so that you do not burden yourself with extra cost. The in-depth information about the loan charge will infact help you to choose the right plan without putting you under any financial stress.
Redemption charges
This is the fee you incur if you want to repay your loan prior to the specified time. Most of the money lenders or the financial institutions will not inform you about the loan charge when you apply for the loan through them. Hence you need to be careful and aware of the details before you apply for the loan. There are many lenders who will charge you more than a month's interest rate if you want to repay your loan early. No matter how early you pay your loan the redemption fee remains the same.
But today people have become more aware of these hidden charges. Hence the lenders and the banks have now started to scrap these charges as it is now affecting their business. Thus before you apply for the loan find out if the bank charges any redemption fee and then make your decisions especially if you plan to repay your loan before the specified time.
Apart from the redemption fee the lenders also charge something called rule of 78. The customers are never informed about this rule. It is a very complex rule according to which apart from the redemption fee the customer will also have to pay extra interest if he repays the loan early. Hence earlier you repay the more you pay. This fee has now been scrapped and the lenders do not charge it any more. The lenders also tend to charge you fee in the name of loan protection so you need to be aware of this as well when taking a loan. If you make a note of all these points when you apply for a loan you will save yourself lots of money. So when taking a loan look for these loan charges so that you can get the best loan deal. If you are paying or have paid any such fee you can claim loan charges back with the help of companies who deal in this.
