When applying for a loan, most people focus on the interest rate and monthly payments. However, many don’t realize that hidden fees can significantly increase the overall cost of borrowing. These fees are often buried in the fine print, leading to unexpected expenses.
Not all lenders operate this way—some offer transparent loan terms with no hidden charges. For instance, etomo prides itself on being a transparent lender, offering loans with no hidden fees, ensuring that you only pay for what you see upfront. To protect yourself from unnecessary costs, let’s break down the most common hidden loan fees and how to avoid them.
1. Origination fee
This is a processing fee that lenders charge to cover administrative costs when approving and disbursing a loan. It is usually a percentage of the loan amount, typically between 1% and 5%.
For example, if you borrow ₱500,000 and the origination fee is 3%, you will receive only ₱485,000 but still owe ₱500,000 plus interest.
2. Prepayment penalty
Some lenders charge a fee if you pay off your loan earlier than scheduled because they lose out on potential interest payments.
For example, if you take a five-year loan but decide to pay it off in three years, the lender may charge a percentage of the remaining balance as a penalty.
3. Late payment fees
Missing a payment deadline can result in a late fee, which may be a flat fee or a percentage of your monthly payment.
For example, if your monthly payment is ₱25,000 and the late fee is 5%, you will be charged an extra ₱1,250 for missing the deadline.
4. Loan processing and service fees
Some lenders charge monthly or annual maintenance fees just for keeping your loan active. These fees can add up significantly over time.
For example, a loan with a ₱500 monthly maintenance fee adds up to ₱6,000 per year.
5. Cash advance fees
Taking a cash advance from a credit card often comes with a fee plus a higher interest rate, making it one of the most expensive ways to borrow money.
For example, a 5% cash advance fee on a ₱50,000 withdrawal means paying an extra ₱2,500 immediately, on top of high-interest charges.
Why transparency matters
Hidden fees can make borrowing far more expensive than expected. Some lenders add these fees to increase profits, leaving borrowers struggling with extra costs.
That’s why it is crucial to choose a lender that prioritizes fairness and transparency—offering clear loan terms with no hidden charges. At etomo, we are committed to providing a straightforward lending process without surprise fees.
Final thoughts
Before taking out a loan, always ask yourself:
- What are all the fees involved?
- Can I negotiate or waive certain charges?
- Am I choosing a lender with transparent loan terms?
Being informed helps you avoid unnecessary costs and borrow with confidence. Choose wisely, and avoid lenders that hide fees in the fine print. With etomo, you can trust that your loan terms will always be clear and free from hidden fees.
