Banks and other loans issuing financial institutions can be quite unscrupulous in trying to make a kill from loan seekers. Especially here in my country with the introduction of the interests cap law, several people who have applied to get a loan, have raised concerns about some dubious charges that had been introduced by various Banks in the country. This actually makes it quite expensive for individuals to service such loans since they(charges) increase the net amount to be repaid. Have you ever encountered some of these charges in your country while applying for a loan? What are the most common hidden charges imposed by banks around you?
Well I wouldn't say the charges are hidden but they are implied. Banks are a business ultimately and their goal is to make a profit. It is up to you the borrower to carefully assess the information provided and to know what is expected of you when repaying. If that is done, then the chances of you getting 'ripped off' are significantly reduced.
I have been working in the bank for 5 years and I am incharged in processing client's loans. I prepare their documents or supporting papers to secure their loan applied for. The bank is only charging aside from the authorized interest rate imposed to every respective loan (for commercial is different from supervised loan which interest is very low), the legal fee for notarization of morgage papers. No other charges so far. I don't understand why banks are charging a hidden interest. What for? In every loan acquired, there is a respective disclosure for the charges imposed to the loan. Meaning everything is shown for transparency. That is in compliance with the Truth Lending Act in our country.
I would have to agree with @Nakitakona. Banks here can't just charge their customers without informing them of such charges beforehand. Hence, it is up to the borrower to scrutinize the documents and see to it that they're not being charged anything that he/she had not agreed to. Some banks, however, have this practice of printing the terms and conditions in the smallest font/type possible which can discourage some people from reading them. It's important to find out what the incidental fees are so we can compare and decide which bank has the better package.
When my mother-in-law got her loan, she was shocked because the interest rate that was mentioned to her before she applied for the loan was way higher than what the agent told her. But even so, she still agreed to the terms since she really need the money. Now, she's having a hard time paying off her loan because the interest rates are so high. So I don't think they are hidden charges, it's just that sometimes the agents misinform the clients with the rates and the terms.
