Usually, when we are availing any services or buying a product, we just look at the price quoted on the front and individuals are either not aware of other associated costs or they do not inquire about these costs. Hidden charges or expenses are those costs that are not specifically highlighted when considering the cost of goods or services. These are the unforeseen expenses that can be minor and not a matter of concern. These costs are hidden and tacked on to the original cost and are usually charged by the companies to cover their record-keeping or any form of administrative charges.
Remember when you went out to buy a washing machine for your house and you paid a certain amount for your machine but when they delivered the product, some extra fees were charged which included the installation, delivery charge and service charges. With personal loans as well we have some similar charges, when a borrower is getting a personal loan the costs they emphasize on the personal loan amount and personal loan interest rate and the other related charges are discovered later on.
Some of the hidden charges that borrowers need to consider while getting a loan are:
1. Processing fees-
The banks bear administration costs to process the application and sanction your loan (HDFC Bank personal loan policy charges a processing fee from 0.50% to 2.50% of the total loan amount).
2. Verification charges-
To confirm if the borrower has the repayment capacity, the banks and NBFCs (Non-Banking Financial Companies) hire an external agency to check the credentials of the borrower.
3. Goods and Services Tax (GST)-
This is charged in case the borrower demands additional services during the personal loan sanction process.
4. Delay/Late payment charges-
Some banks and NBFCs (Non-Banking Financial Companies) charge small fees from the borrowers when make delays in the payment of personal loan amount.
5. Pre-payment charges-
If a borrower has a surplus and is ready to foreclose the loan by paying the entire amount of personal loan, the bank and NBFCs (Non-Banking Financial Companies) charge a fee for their lost interest revenue.
6. Duplicate statement charges-
In case a borrower requires a duplicate statement of the payment schedule, the bank, and NBFCs (Non-Banking Financial Companies) charge fees and provide the details to the borrower.
These charges are for the services and the facilities provided by the banks and NBFCs (Non-Banking Financial Companies) in exchange for a small amount but it is very crucial on the part of the borrower to be aware of these hidden costs.
Comments