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5 Hidden Fees to Look out For when getting a loan

5 Hidden Fees to Look out For when getting a loan

Are you interested in applying for a loan? No matter if you are buying a home, car, or dealing with some other type of loan, you know that there are many details that you must pay attention to. While you are sure to be excited that you are finally getting the money you need to make your purchase, it is important to focus on the fees associated with the loan.

Before we go any further, there are going to be fees you have to pay as well as those that you may be able to negotiate out of the loan. You have to discuss each and every one with the lender. If nothing else, this will put you in position to learn more about the type of loan you are opting for and just how much you are actually paying.

Here are five hidden fees to be aware of when getting a loan:

1. Application fee

Get this: some lenders will charge you a fee for simply completing an application and doing business with them. Is that fair to you? Some may answer yes while others answer no. The good thing is that you can often times have this waived.

2. Early payoff penalty

Do you plan on paying off your loan before it is due? If so, you want to be able to do so without any early payoff penalty. Unfortunately, many lenders have one of these in place. Make sure you check on this before you sign on the dotted line. Especially if you have plans to pay extra.

Stack Of Dollars by Petr Kratochvil
Stack Of Dollars by Petr Kratochvil

3. Maintenance fee

These are fees that the lender may charge, month in and month out, to service your loan. This is not something you want to get involved with, under any circumstances, so you should inquire as to whether this is included.

4. Underwriting fee

Once you complete your application, it heads to the underwriting team for approval or denial. It is not uncommon for lenders to charge an underwriting fee, telling you that there is a lot that goes into this process.

5. Packaging fee

When you apply for a loan, you must be 100 percent honest about your information including your finances and personal background. Unfortunately, if the lender helps you complete the application, which happens sometimes with a business loan, a charge may be included. In this case, you should be charged by the hour.

Final note: the type of loan you are applying for will go a long way in determining any fees you may be charged.

To ensure that you are avoiding as many fees as possible, compare multiple lenders and make sure you read the fine print. There is nothing worse than paying fees when you don’t have to.

Now that you know how to avoid hidden fees, you can have a better overall lending experience.

Author: Jules Brown

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