Smålåns lets you access extra money in a pinch for almost any expense you could think of. Whether it’s a surprise medical bill, wedding expense, a home renovation, or even funeral costs, you are sure to get a loan that fits your needs and desired funding amount.
However, taking a small loan without proper research can turn your decision into a financial burden. While it’s given that you will repay the principal amount plus interest, loans come with other hidden charges. Fortunately, you can always lower or even avoid some of these hidden fees. Here are the top four hidden fees to avoid when applying for the best smålån.
1. Processing Fees
These are probably the most typical smålån hidden charges. Sometimes they are not hidden, and they may be levied upfront. However, they are usually deducted from your loan amount during disbursement.
The charges are nonrefundable, and they are not small, either. Processing fees are normally between two and five percent of the total loan amount. If you need a small loan, be sure to check out forbrukslån.no/smålån/ to compare small loan lenders and understand their processing fees and interest rates.
2. Prepayment Penalties
A lot of people think that paying off their loans early will save them on the cost of the loan. That’s not always the case, though. Some lenders will charge a prepayment fee if you clear your loan before it’s due to mature.
The actual cost of paying off your loan early depends on how it’s being charged. A prepayment penalty can be charged in one of these three ways:
- A percentage of your loan balance
- A fixed fee
- The amount the lender would have earned if you had not paid off your loan early
These charges can run you hundreds of dollars, depending on how early you cleared your loan and how it’s being charged. The good thing is that it’s easy to avoid a prepayment penalty charge by simply choosing a lender who does not charge it.
Be sure to go through all the terms and conditions before you sign on the dotted line. Alternatively, you can always negotiate with the lender to eliminate the prepayment penalty if you plan on paying off your loan early.
3. Late fees
While late fees are not exactly hidden, they are sneaky in a different way, and you may think they will not happen to you until they do. Lenders usually charge between three and five percent if you are a few days late. And to make it worse, late payments can hurt your credit score, making future borrowing more expensive.
You can dodge late payment fees by setting up reminders on your calendar. You can also automate your payments. Alternatively, you can choose a lender who does not charge a late payment fee if you are a few days late.
4. Loan cancellation fees
If you start a loan application process, be sure you want it because you may be charged a fee if you decide to cancel it before it’s processed. A loan cancellation fee can differ from one lender to the next. It can either be charged as a fixed amount or a percentage of the amount of the loan you want.
Endnote
Hidden fees can significantly impact the cost of getting a smålån. Be sure to read the fine print before you sign. You can also ask the lender about some of these fees, including processing fees, cancellation fees, and prepayment penalties.
