Loans come with different fees attached. It could pile up and make repaying the credit expensive. Apart from its interest, there are few other fees, which are part of the loan agreement. These additional charges could ultimately bloat the principal amount of your loan. Before applying for any loan, you need to fully understand your loan and the different fees that come with it. Some of these charges, which you are bound to pay will determine the total amount that you will be repaying each month. Here are some of the most common fees included in a loan that you should know about:
Processing Fees
Many banks lack cash out policies and thus will still deduct some amount from your loan. Such deductions are meant to cover the processing fees. The charges may vary from one bank to the other. Always consult the loan officer assigned when applying for a loan. Ask questions regarding the applicable processing fees and its amount. It is necessary because it will lower the amount that you will be receiving. In some cases, the banks will add the processing fee to the principal amount on top of its interest. Determine which applies to your loan before you sign the loan agreement contract. Do not hesitate to ask questions especially if the calculations confuse you.
Late Payment Fees
Your monthly installments have a due date. Once you fail to submit your payment on time, there will be an extra charge, which regarded as the late payment fee. It is a form of penalty applied to your installment fee for the month. Instead of paying just the installment fee for the month, you will pay more. Many lenders charge 5% each month as a late payment penalty, but it may vary from one lender to another. If you would like to avoid getting slapped with such late payment fees, make sure that you are submitting your payments a few days before the due date, if not the due date. It will protect you from all the frustrations of having to dig deeper into your pockets to fetch the fine.
Early Payment Fee
There are instances where you decide to repay your loan in full without having to wait for the period stipulated. In such a case, most lenders will charge you some fee to clear your outstanding principal balance. This fee could be charged as a flat fee or on a percentage basis, so if you are considering making such payment, talk to the loan officer and confirm with your bank to know the amount you will need to part with. The significant benefit of paying before the maturity date is the fact you can save on interest charges, which is a big bonus. Early payment fee is also based on the type of contract, so not all loans may come with this offer.
Prepaid Debit Card Fees
Prepaid debit card fees have charges once you deposit or load any amount of money to your cards. The fees charged could include the money credited to your account. Also, transferring money, checking your balance, and withdrawals may bear fees depending on the bank. To avoid such charges, choose a deposit method that will give you peace of mind every time you need to see your balance. You could also consider withdrawing all the money from your bank at once as processing a number of withdrawals could attract transaction charges during each time you withdraw the money.
Rollovers
Payday loans might charge rollover fees. It happens when your loan is due, and the law in your state allows rollovers. The lender might enable you to cover the charges only to extend the due date if you are not able to raise the full amount of time. The rollover fee is charged based on the amount you have borrowed. As a result of the tremendous amounts, you might end up losing too much.
Getting a loan to address a need is a good idea, but the costs that come with borrowing might be too heavy to bear if you are not prepared to embrace them. You need to understand the different charges attached to loans, in which you will be required to pay. So, before you apply for a loan, you can tell what you will incur.
It’s always best to know what type of commitment you’re getting yourself into, the next time you take out a loan, check out www.moneylend.net for a quick and easy comparison chart between reliable borrowers, as well as a clear and concise breakdown of fees.