5 things to know about loan consolidation fees
Whether it’s an unexpected and expensive auto repair or financing a small business, personal loans can come in handy for a variety of life expenses. One of the advantages of personal loans is that they can be used for just about anything from paying off a credit card to general debt consolidation. With interest rates at historically low levels, personal loans can also be an affordable way to borrow money.
As beneficial as these unsecured loans are, it is possible to be struck by unexpected associated fees during the loan process that could cause you to pay back more than expected. Five personal loan fees that personal loan borrowers encounter that can be large and expensive include fees like late fees, check return fees, application fees, and more.
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HOW MUCH DO YOU PAY FOR A $ 40,000 PERSONAL LOAN?
1. Penalty charges for early payment
The longer you take to repay a loan, the more interest you will pay. In fact, lenders rely on borrowers using the full repayment term. Therefore, some charge borrowers a penalty if you pay off your loan early. The amount may vary. Some lenders charge a fixed fee while others may calculate it on a percentage of the loan amount or the remaining monthly payments. If you intend to repay the money sooner than necessary, be sure to choose your lender wisely and check the prepayment penalty fee. You can explore your loan consolidation options you just have to visit https://www.paydaychampion.com/`s official website to compare rates and lenders.
2. Late payment fees
The flip side of prepaying a loan is making a late payment. As with any type of loan or monthly bills, payment after the due date may incur late fees. However, the amount you will pay will vary. Some lenders charge a fixed fee while others may charge a percentage of the monthly payments. You can avoid these charges by paying your bill when it is due or signing up for automatic payments. But it’s always a good idea to check how much you might owe before signing the loan agreement to avoid any surprises.
WHAT HAPPENS IF I DEFAULT A PERSONAL LOAN?
3. Check return fees
Check return fees or insufficient funds are charged if there is not enough money in your bank account to cover your payment. This could be due to a bad check or insufficient funds to cover an automatic payment. These fees, often associated with late fees, are usually a fixed amount, ranging between $ 20 and $ 50.
4. Application fees
Some lenders will charge you apply for the loan, and these charges are generally non-refundable. The reason banks claim the fees is to cover the costs of processing your loan application, such as time spent by employees and getting a copy of your credit report. If you are not approved for the loan, you still have to pay it off, so make sure you qualify before applying. The amount will vary depending on the lender, generally ranging from $ 25 to $ 50. Not all lenders charge these fees. It can help to visit Credible to get in touch with experienced loan officers who can answer your personal loan questions before you face any fees.
5. Original tax
Another potential personal loan expense is a loan origination fee, also known as a processing or subscription fee. This type of charge is common on mortgages or student loans, and some lenders – usually online lenders – stick it to a personal loan, carrying it into the loan amount. The amount you pay will vary. Some charge a fixed fee and others charge a percentage of your loan, ranging from 1% to 10%. The amount you are charged is usually determined by your credit score. If you have excellent credit, you will probably be paying on the low end. Borrowers with poor credit can still be approved but they will often pay on the high side.
PERSONAL LOAN ORIGINATION FEE: ARE THEY WORTH THE COST?
How to avoid personal loan fees
It is possible to avoid paying some fees on unsecured loans because not all banks charge for them. Start by closely comparing lenders and rates.
Once you’ve found rates and terms that look acceptable, read the fine print. Lenders must disclose all charges in advance. Even lenders who don’t charge an application fee, set-up fee, or prepayment penalty will likely charge you for a late payment or bad check.
Make sure you understand the additional amount you are paying to determine if a personal loan is a wise choice. Visit Credible to use their personal loan calculator to determine how a loan can impact your budget.
Whatever you choose, take out a loan with your eyes wide open – looking for fees. They can add up, so be sure to take whatever steps you can to keep your money in your pocket.