Loan Tips: You have to pay these 5 hidden charges to take a personal loan..

There is no guarantee of life. No one knows when any sudden expense or a big emergency may come. At such times when money is needed, we look into our savings. If this does not fulfill the need, then we ask for help from friends and relatives. If you do not get any help from a friend or relative, then the only option left is the bank. Nowadays, personal loans are easily available. Since these loans come under the unsecured category, the interest on them is also the highest compared to other loans.

Who gets a personal loan?

If you do a job. Salary comes on a fixed date every month. Cash flow is good. Credit score is above 700. Repayment capacity is good. You have never missed an EMI before. If you pay the credit card bill in full and on time every month, then you get a personal loan.

The highest interest is charged on this loan.
A personal loan comes under the category of an unsecured loan. This is considered to be the loan with the highest interest rate. Therefore, you should take it only when you have no other option. You should avoid taking a personal loan for small needs.

It is important to understand hidden charges.
Of course, personal loans are available very quickly and with less paperwork. But, taking a loan without complete information can trap you in a debt trap. Many types of hidden charges are included with personal loans. No bank tells about them openly. And even the loan agreement documents are written in such a difficult language that we usually cannot understand. In such a situation, you should check your knowledge before taking a personal loan.

Processing fee
Banks charge a processing fee for taking a personal loan. This is a fee to take your profile and loan application forward. Usually, most banks or NBFCs charge a 1 to 3% processing fee for personal loans. This loan amount is deducted even before it is disbursed. If you took a loan of Rs 5 lakh and the fee is 2%, then you will get only Rs 4.9 lakh. But you will have to pay more than Rs 5 lakh, including interest.

Prepayment and foreclosure charges
The EMI of a personal loan is huge. In such a situation, most people make a part payment or prepayment to finish the loan quickly. That is, when a lump sum amount comes from somewhere, some amount of the loan is repaid. However, banks charge you a penalty for this as well. If you repay the loan before the stipulated time, then a foreclosure charge of 2% to 5% is levied.

Late payment and EMI bounce fee
Many times, we are unable to pay the EMI on time, or there is not enough balance in our account at the time of EMI deduction. In this case, banks charge you a penalty. If the EMI bounces, a fine of Rs 500 to Rs 1,000 can be imposed. This can also lower the credit score. Therefore, EMI should never be allowed to bounce.

Unwanted insurance interest
Some banks add an insurance policy to a personal loan without informing you. Sometimes, personal accident or loan protection insurance is added on to the loan. Interest is also charged on this. An insurance policy is not mandatory for a personal loan. Therefore, ask the bank clearly about this before taking a loan.

GST on every charge
Not only this, while processing a personal loan, banks or non-banking institutions add GST to every process and every fee. 18% GST is also added on the loan processing fee, late payment, foreclosure charges. This further increases the total loan cost.