Personal loans are the easiest ones to plan for and are given at lower interest rates than credit cards. The best way for you to choose the right personal loan is to research different lenders and compare their fees, interest rates, and other factors.
Personal loans often come with fixed interest rates and do not require you to pay any fees. Only those with excellent credit scores are applicable for such loans which offer the best interest rates. Here are some fees you should avoid paying if you take out a personal loan.
Application fees
While most personal lenders do not charge you for applying for their products, some do. Application fees are non-refundable and are charged for the processing of your application and the setting up of your new loan. Try to find lenders to whom you don’t have to pay this extra charge. It is even better if you opt for lenders who give you pre-approved loans and don’t scrutinize your credit report.
Prepayment fees
Prepayment fees are charged when you pay off your loan earlier than the date of its maturity. It is advisable to find lenders who do not penalize you for doing the right thing, that is, prepaying your loan.
Returned check fees
You will also have to pay an extra fee if your check is returned for any reason, including insufficient funds in your account. These fees are variable but usually range between $15 and $25 for every returned check.
The safest way to ensure you do not have to bear this extra cost is to keep enough funds in your account to make your personal loan payments. Choosing to pay online using a direct bank transfer is also a good option as it helps you prevent the possibility of your money getting lost in the mail.
Late fees
If you make your personal loan payments later than the due date, most lenders are likely to charge you a late fee. This only makes your loan more expensive than it has to be. Avoid paying your dues late by either setting up alerts on your phone, marking the due date on your calendar or setting the bill to be paid on auto-pay.
Some lenders even offer discounts if you choose the auto-pay option, which helps you save some bucks and avoid late payments as well.