Friends, today's needs have increased so much that their income is not enough to cover all their needs. To meet these needs, people take out loans, which are easily available, but it's important to understand the hidden costs and conditions involved. Knowledge of fees, penalties, and EMI management can save you from unnecessary financial stress. Let's explore some things to consider before taking out a loan:

Processing Fees

Banks and NBFCs charge a processing fee before disbursing a loan, which typically ranges from 0.5% to 3.93% of the loan amount. So, be sure to check the exact amount before applying.

Prepayment or Forfeiture Fees

If you plan to repay your loan early, many lenders charge a prepayment or forfeiture fee, which typically ranges from 2% to 5% of the outstanding balance.

EMI Penalty for Late Payments

Missing EMI payments can result in a penalty of 1% to 2% per month. Repeated delays can also harm your credit score, impacting your chances of getting a loan in the future.

Loan Insurance

Some banks offer optional loan insurance to cover unforeseen events. While this provides protection, it may incur additional costs.

Stamp Duty

Loan agreements incur stamp duty, which varies by state. Although the amount is small, it is necessary to validate the document, so check the applicable charges beforehand.

EMI Date Management

If your pay date changes, request the bank to adjust your EMI date accordingly. Keeping your EMI date in line with your cash flow helps avoid late payments and protects your credit score.