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When Applying for a Personal Loan, How Can You Avoid Hidden Fees?

It is quite easy these days to apply for a Personal Loan and instantly get approvals and sanctions from the lender. However, such convenience can cost you dearly if you ignore the fine print.

A Personal Loan is a significant decision. If you are not diligent about the facts, it could result in a financial burden. Despite the transparency, some lenders have hidden fees or a minimum processing fee. So, it is best to clarify any hidden fees, if any.

Foreclosure fees, late payment, prepayment, processing, EMI-bounce, and balance transfer fees are some hidden charges associated with a Personal Loan.

Although you cannot avoid loan fees, you can be aware of them so that you may make an informed choice before you finalize a Personal Loan and apply online.

Before agreeing to any loan, review the terms and circumstances carefully.

The procedure of applying for a personal loan could appear uncomplicated. After all, a lender will pull your credit report, review your application, and let you know how much money you qualify for.

When you apply for Personal Loan online, some fees (or charges) are usually associated with it. Despite the transparency, some lenders impose a minimum processing charge or may have additional fees that are not upfront. If there are hidden fees, it is advisable to bring them up.

What Hidden Fees Might a Personal Loan Have?

Some of the hidden costs involved in a Personal Loan are:

1. Foreclosure Charges

A loan is repaid in full before the agreed-upon term, referred to as foreclosure. Early debt repayment could result in a loss for the lender.

The lender may charge a fee for early repayment to offset the loss. Depending on the lender, the fee could vary.

2. Processing Fees and GST

A processing fee covers the cost incurred in processing a loan, a one-time charge imposed by a lender. In the loan contract, the fee is expressly indicated.

Administrative costs, fees for handling documents, charges for credit cheques, etc., are often included.

When processing and authorizing a loan, lenders pay some administrative-related expenses. Depending on the loan type, the borrower’s creditworthiness, and the loan amount, the processing charge may change.

3. Prepayment Charges

If you decide to pay off a part of your loan early, extra charges may be involved. It will depend on your lender’s policy and whether there are any fees associated with paying off early (such as prepayment fees).

4. Late Payment Penalties

Lenders impose late payment fees on borrowers who do not pay their monthly EMIs on time. No matter how lenient the lender may be, you cannot avoid paying this cost.

Therefore, you must make your EMI payments on schedule to avoid paying these penalty fees.

5. EMI-bounce Charges

Whether on purpose or accidentally, EMI-bounce occurs when you miss an EMI payment due to an insufficient amount in your savings account. The borrower will typically be charged for each bounce.

6. Balance Transfer Cost

Transferring your outstanding Personal Loan balance from one lender to another with better conditions is known as a balance transfer. Your current lender may charge a fee for transferring your loan account to a new lender.

How May Hidden Fees on a Personal Loan Be Avoided?

Fees on loans cannot be avoided, but you can be aware of the fees charged for making an informed decision.

Before you apply for a Personal Loan online, reviewing the terms and conditions is imperative. If you fail to do so, you will face problems later on. Some things to consider include interest rates, repayment period, prepayment penalty, etc.

Read carefully and try to spot any loopholes or hidden traps. Also, it is advisable to seek assistance from a professional who will walk you through each step before you take a Personal Loan.

You must know any potential fees in your loan agreement from the beginning. To learn more about these fees and the rationale behind their inclusion in the agreement, speak with the lender.

You can also use a personal loan EMI calculator to quickly calculate the repayment of your Personal Loan and plan your finances accordingly.

Moreover, you can choose to take a loan from a reputed lender with transparent terms & conditions. By doing this, you will avoid any future problems.


Before selecting a lender for a Personal Loan, evaluate interest rates, processing fees, prepayment fees, and other fees.

There need not be any unfavorable effects on your financial situation, and the deal must be transparent.

With Clix Capital, you can get an instant Personal Loan to meet your needs at competitive loan interest rates ranging from 14.99% – 24.99% at flexible repayment tenures ranging from 24 to 60 months.

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