With the growing popularity of loan apps in India, borrowing money has never been easier. Whether you need cash for an emergency, a big purchase, or to cover everyday expenses, a loan app can provide a quick and convenient solution. However, before applying for a loan, it’s essential to understand the interest rates and fees associated with these platforms.
Many borrowers get attracted to an easy loan app due to its fast processing and minimal documentation, but hidden charges and varying interest rates can sometimes catch you off guard.
In this article, we’ll break down what you can expect when using a loan application in India and how to make the best financial decision.
Understanding Interest Rates on Loan Apps in India
Interest rates onloan apps in India vary depending on multiple factors, including the lender, your credit profile, and the type of loan you choose. Here’s what you should know:
Annual Percentage Rate (APR)
Most loan apps charge an APR ranging from 12% to 36%, depending on the loan amount and tenure. Some short-term loans may have higher rates due to the risk involved.
Daily or Monthly Interest Calculation
Some loan apps charge interest on a daily or monthly basis instead of annually. Always check the terms to understand how your loan will accumulate interest.
Credit Score Impact
A high credit score often results in lower interest rates, while a lower score can increase the cost of borrowing. Some easy loan apps provide loans to those with low credit scores but may charge a higher interest rate.
Fixed vs. Floating Interest Rates
While mostloan applications have fixed rates that remain the same throughout the tenure, some lenders offer floating rates, which can change based on market conditions.
Common Fees Associated with Loan Applications
Apart from interest rates, loan apps in India may charge additional fees that can affect the overall cost of your loan. It is important to be informed about the following common charges:
Processing Fees
- This is a one-time fee deducted from your loan amount before disbursal.
- Typically ranges between 1% to 5% of the total loan amount.
- Some loan apps waive processing fees as part of promotional offers, so keep an eye out for such deals.
Late Payment Charges
- If you miss an EMI payment, you could be charged a penalty.
- These charges vary but can range from ₹500 to ₹2,000 per missed payment.
- Some lenders charge a daily penalty for overdue payments, which can add up quickly.
Prepayment or Foreclosure Fees
- If you wish to repay your loan before the tenure ends, some lenders may charge a prepayment fee.
- This fee can be 2% to 4% of the outstanding loan amount.
- Not all loan apps impose this fee, so look for an app that offers free prepayment if you plan to repay early.
Convenience and Processing Charges
- Some loan applications charge extra fees for auto-debit failures, document processing, or payment reminders.
- While these are usually small amounts, they can add up over time.
GST on Fees and Charges
- A GST of 18% is applicable on all service charges related to your loan.
- Ensure that you check the breakdown of charges before finalising your loan.
How to Choose the Right Loan App with the Best Rates and Fees
With so many loan apps in India, it’s crucial to compare options before applying. Here are some tips to find the best loan app:
- Compare Interest Rates: Always check the APR and opt for a lender with the lowest possible rate.
- Check for Hidden Fees: Read the terms and conditions carefully to avoid unexpected charges.
- Look for Flexible Repayment Terms: Some apps allow you to choose between weekly, fortnightly, or monthly repayments.
- Read Customer Reviews: Feedback from other borrowers can give you insights into the app’s reliability.
- Ensure Secure Transactions: Choose a platform with strong data protection measures.
Applying for a Loan: Step-by-Step Guide
1. Download the Loan App: Choose a trusted loan app from the Play Store or App Store.
2. Register and Verify Your Identity: Enter your basic details and complete KYC verification.
3. Check Loan Offers: Based on your profile, the app will show available loan options and interest rates.
4. Submit Your Loan Application: Enter the required loan amount and tenure, then upload the necessary documents.
5. Approval and Disbursal: If approved, the amount is credited to your bank account, often within 24 hours.
Parting Words
Understanding interest rates and fees before applying for a loan can save you from unnecessary financial burdens. While loan apps in India provide quick access to credit, it’s essential to compare different apps to find the best option for your needs.
If you’re looking for an easy loan app that offers transparent fees, quick approvals, and flexible repayment terms, consider the True Balance loan app. With competitive interest rates as low as 2.4% per month, minimal processing charges, and a hassle-free application process, True Balance makes borrowing simple and convenient.
Download the True Balance loan app today to access quick and affordable loans!
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