Loan is the lending of money to individuals or organizations and in turn the recipient is liable for the amount borrowed and the interest applicable. Loans is a fast way of securing fast cash for your intended purpose. When securing a loan, there are some things that you must consider before taking a loan.
Some loans banks have hidden charge that they will not make you aware when you are making a loan application. The banks tend to advertise in a way that makes the loan much cheaper, the lender can overlook this and this will significantly affect the loan amount or the amount to be paid back.
An individual should be concerned with the fees that will be charged as they will increase the cost of borrowing. In some cases, some loans have an origination fee which is the cost of processing the loan passed on to the total cost of the loan. Annual fee charges are some types incurred for maintaining the account with the bank or company.
When borrowing, you should be aware that the amount borrowed will impact on the interest you pay, possible fees and the loans lifespan. Those who borrow a second loan to top up the first one, should know that this will increase the amount meant to be paid. It is advised that you should only borrow what you need and DO NOT BORROW TO SERVICE AN EXSITING LOAN.
Failure to pay the loan even by a day attracts penalties that increase the amount payable in the bank or company The interest is charged must be payed, if a payment is missed, this will incue a penalty charge. But it’s avoidable by paying the loan on time
If you borrow a certain amount in banks, some will be deducted as a fee giving you less money than what you signed for. A few years ago, this amount was paid before the loan was issued but nowadays the loan pays it off as it proceeds. This fee charged will include all the credited costs.
If you transfer a loan from one bank to another account, you usually incur a transaction fee. The borrower should ensure you read all terms and conditions to avoid incurring unexpected charges.
Should you offer security on a loan, the bank will need to value your property. A stamp duty will be required by the government in the valuing process. In the case of security on a loan ,the stamp duty will be required which will in turn cost you. Also you will require a lawyer through this process which will additional cost to you. This often happens for very large loans i.e mortgage
In case you are unable to pay up a loan, the bank can either hire a lawyer or a debt collector to come collect the loan and additional charges. The bank is not responsible in paying up the debt collector so you will also have to pay the debt collector as well as the outstanding loan and subsequent charges. When the debtor collector comes to collect the loan, the amount of money given to the collector will go to towards the loan and the collectors fee.
If you are unable to repay the loan, the bank will force you to sell your properties. The selling of your properties and all the cost incurred in selling, transporting and the period it stays on the yard, will cost you and not the bank
Lack of payment of a loan results in being backlisted and hence they share your information with the CRB. As such you are likely to be denied future loans by any other bank or other loan companies. Even after you clear up your loan, the record remain for a period of time before its removed from CRB
When one applies for a loan, the insurance fee is on them and is added as your amount to be payed from the loan borrowed.
With all this charges, loans tend to cost you a lot of money, more than you expect, making it difficult for many people to repaying it. If banks and loan companies told the borrowers about this chargers, it would save them from a lot of incurred cost and they will only borrow the necessary cash to avoid inconveniences.
Before applying for any loan, will highly recommend you to through our search facility, compare the loan company and determine the best that fits your need