Understanding various charges and processing fees related to your selected lender will give you an estimation of how much you have to spend initially or monthly with hidden charges and the bank’s application and loan processing fee. For instance, you have selected a home loan to purchase your dream house. You should know the loan processing fee, some repayment policies, taxes included, interest rate, down payment fee for home renovations and several types of hidden fees. You can easily get hands on various types of loan charges for purchasing a home of your choice. No matter, whether you are choosing a home loan or a personal loan in Mumbai, Delhi, Chandigarh, Rajkot or Lucknow, you should know the hidden charges and other fees related to your loan.
Here, in this blog, you will know several types of processing fees, hidden charges and administrative fees incurred to your loan account:
Types of Loan Processing Fee
There are several types of processing fees you have to pay to your lender. It covers administrative costs in processing your loan. You will be charged at the rate of 0.25 to 2% and it may differ from one lender to another.
Home Loan Processing fee
If you are purchasing a home loan, then you will be charged a processing fee which covers several types of administrative charges like evaluation, document assessment and verification process, credit checks and application submission fee.
Application Fee
It’s one of the most important fees levied by the lender. This fee is usually charged on submitting your application and often deducted from your processing on the approval of your home, personal, business or car loan.
Loan Valuation and Legal Fee
This fee covers various types of legal checks on the particular property and independent valuation to access the market value.
Technical Fee
Some lenders charge various types of additional fees for several types of credit checks, document verification and other sorts of services involved with the technical aspect of your loan application.
Types of Hidden Charges
There are various types of hidden charges you have to pay if you haven’t paid your debates on time, missed EMI or have a history of bad credit during your loan tenure:
Late Payment Charges
This penalty is charged with your EMI when your payment gets late related to a personal loan, business loan or even a home loan. Late payment charges are not disclosed to you and they will be added to your EMI in the next month.
Missed Payment Penalty
This penalty is charged by the lender in case you have missed any sort of payment against your loan debt. It’s one of the popular types of hidden charges that are added to the month’s next EMI.
Bad Credit Payment
These hidden charges are levied on the borrower when he/she is continuing the loan application with a bad credit history. You should keep your credit score above 900 to maintain stability and avoid these charges.
Foreclosure Charges
If you want to close your loan or credit application before its maturity, you will be charged a hidden fee or penalty from your lender. So, make sure to not foreclose your application before the time of maturity.
Documents Required For Loan Application
Several types of documents are required for the approval of a home loan. Let’s talk about various things needed for the approval of the loan:
Proof of Income
Lenders ask for income proof to access the stability of money created for your income or employment. You need to show them some records like salary slips, bank account details, tax returns and detailed statements of your transactions.
Identity Proof
For identity proof, you should provide an Aadhaar card, passport and PAN card. These documents are valid and government-approved which can be easily chosen for showing your identity.
Residence Proof
You need to show your proof of residence where you live. There are various documents you can show like ration cards, utility bills, Voter IDs, passports etc. Whether you want a personal loan or a business, residence proof is a mandatory document asked for by several types of lenders. For instance, if you are borrowing a personal loan in Mumbai, Delhi, Kolkata or Bangalore, you have to provide these documents to show your eligibility for the loan.
Documents related to property
If your loan has collateral, then you have to show property documents to your lender. You can provide them with property deeds, prosperity agreements, sale copies etc.
Summary
In a loan application, you might need to face several charges, and processing fees for a loan application by your lender. To tackle these issues and financial stress at a later stage, you should be aware of their policies related to hidden fees, penalties and processing fee charges in advance.
