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In the past, getting any kind of loan was a hard task. Fortunately for you, with the rise of online lending platforms and more flexibility from traditional financial institutions, you can obtain a loan a lot easier nowadays, even if you are from another country.
Even though it’s easier to obtain a loan does not mean that it’s free. There are different fees that you will have to cover when you get a loan. Each loan is different and the fees might change, some fees can even be nonexistent for certain loans, but all of them will have at least one.
Before getting into the different fees, it’s important to understand that every loan comes with an interest rate that will be different depending on various factors.
An interest rate is expressed as “Annual Percentage Rate” (APR), and it can be fixed or variable. If your loan has a fixed APR, the interest rate that you pay for your loan will never change during the term of the loan. On the other hand, if your loan has a variable APR, the interest rate will change every payment. The average APR is set at 9.34%.
In some cases, when you are asked to pay an application fee, you will be paying without knowing if you are actually getting the loan. This fee is usually small, but still keep in mind that it does not guarantee you the loan even if you have paid this fee. The fee is usually somewhere between $25 and $50.
This fee is charged after your loan is approved. They will charge you a fee to send the money to your account. This fee is represented as a percentage of the amount of the loan, usually ranging from 1% – 6%.
Late payment fee
Late payment fees are charged whenever you do not pay on time and pay after the due date. This fee is charged to reduce the risk of the lender and can be seen as a percentage (3% – 5%) or a flat fee ($25 – $50).
As you can see in this article, paying early is not always a problem, but it is important to read all the information before accepting a loan. That way, if you want to pay off your loan early, you will already have that information.