We all know that certain fees and charges go along with taking out a loan, or applying for a credit card. This is how lenders make their money, but it can be hard to figure out what all you are paying and just how your monthly payment is allocated. Knowing where your money goes is the first step on the road to financial recovery. So, when your monthly bills come in, take a closer look to see just what all you are being charged for the benefit of doing business with your creditors.
Five hidden fees your lenders charge, with tips on how to avoid these fees, include:
- The cost of having a bad credit score will significantly increase what you pay in interest every month. In order to avoid paying a higher rate, take steps to repair your credit before taking out a loan.
- The length of your loan may also be costing you more money than you need to spend. The longer you take to pay off a loan, the more you will pay in interest. If you are able to increase your payment a bit, think about shortening the loan term or paying extra to the principal balance. This will reduce the amount you owe much faster.
- Costs for add-on’s or required insurance should be taken into consideration when applying for a loan. Shop around for the lowest rates beforehand so your total monthly obligation fits within your budget.
- Origination and other fees are often tacked on to a loan. Before you sign on the dotted line, make sure you know the amount of these fees, and ask for them to be eliminated or reduced if possible.
- Accumulated interest fees, most often associated with a deferred loan. While you do have the option on some types of loans (such as a student loan) to defer payment for a period of time, the interest will continue to accumulate when you are not paying. In order to avoid being shocked at the amount of accumulated interest, opt to make an interest only payment rather than defer the payment all together.
Knowing what to expect from your loan, and where you money goes when you make a payment will help you to budget your finances. If you find yourself in over your head financially even after exploring these fees and other options for repayment, you do have options. Call our office to learn more.
For more information about debt and debt management, contact us at www.DsouzaLegalGroup.com. We will help by coming up with solutions that work for you.