Gone are the days when you had to wait days for loan approvals, visit physical branches, and manage lengthy paperwork. With the introduction of personal loan apps, loan applications have become seamless, making them a go-to solution for many. However, with the convenience of easy access to funds, many applicants fail to notice hidden costs applied by insta personal loan apps. These are the charges that can increase the cost of the loan and the total amount you have to repay.
If you are considering applying for a loan, make sure you understand the hidden costs and how to avoid them.
Hidden Costs of Personal Loan Apps
Let’s explore some of the common hidden costs charged by personal loan apps when you opt for a loan:
- Processing Fees: One of the most common fee charges by financial institutions, deducted either beforehand or after the disbursement of the loan amount. It generally ranges between 1%-3% of the loan amount and is often not disclosed by the lenders.
- Loan Cancellation Fees: Many financial institutions and personal loan app for self employed and other borrowers charge a specific amount if you cancel the loan within a specified period.
- Prepayment and Foreclosure Charges: These are the fees that institutions charge if you close the loan before the tenure. It typically ranges from 1% – 6% of the outstanding amount.
- Late Payment Fees: As the name suggests, institutions charge fees even if you don’t pay the loan EMIs in time. These penalties not only accumulate quickly but negatively impact the credit score.
- High Interest Rates: The convenience of loan apps often comes with a price. Many apps may impose high interest rates on personal loans, especially since they offer unsecured loans without collateral. If you are borrowing a significant amount, look for specific platforms like personal loan app up to 5 lakh.
- GST (Goods and Services Tax): Barely mentioned in the terms and conditions, GST is applicable to processing fees, prepayment penalties, and other service charges. Currently, 18% of the GST is charged in India, which can change with time.
How to Avoid the Hidden Costs?
Here are the common tips to help you avoid hidden charges on your insta personal loans:
- Read the Terms and Conditions: Make sure you read all the terms and conditions before proceeding with the loan and signing the documents. Pay special attention to the charges section, including the processing fees, prepayment penalties, foreclosure fees, and other charges by the lender.
- Compare Interest Rates: Do your research, compare the interest rates charged by different lenders, and choose the one that best suits your needs.
- Choose the Right Tenure: Many personal loan apps for self employed and other individuals offer the benefit of choosing repayment tenure. Ensure that you choose the time period that best fits your current situation without making it a burden on your shoulders.
- Use a Loan Calculator: Borrowers must use an online loan calculator to know their monthly EMIs, align them with their budget, and then choose the right loan amount and tenure.
Final Thoughts
While loan apps provide an unmatched convenience, make sure you understand the hidden charges to avoid financial strain. Choose a reputed insta personal loan platform like Bajaj Finserv that maintains complete transparency and promises to charge no hidden fees. The app is user-friendly and offers numerous benefits, including flexible loan tenures, quick loan processing, minimal documentation, 100% digital loan application and more.
By keeping yourself informed, discussing charges with the lender and following the above tips, you can definitely make informed decisions and borrow responsibly.
