At Salad, our ‘More Than Your Score Loans’ don’t have any hidden or unexpected expenses. What you see is what you get. For emergency loans made simple, think Salad.
Personal loans can be a great way to cover big expenses, whether it’s for home repairs or even debt consolidation. However, while they may seem straightforward, borrowers can be caught off guard by hidden fees that aren't always clearly explained upfront.
These extra charges can quietly pile up and drain your wallet before you even realise it. From processing fees to prepayment penalties, these costs can make your loan much more expensive than you expected. That’s why it’s important to check beyond just the interest rate when you’re comparing personal loan offers.
In this blog, we’ll discuss the 4 common hidden charges in personal loans that you should watch out for. If you’re planning to take out a loan, it’s good to know what to expect, as it’ll help you avoid nasty surprises and make smarter borrowing decisions.
1. Origination Fees
An origination fee is a charge some lenders take for setting up your personal loan. It’s usually a percentage of the total loan amount, often between 1% and 5%, and is either added to your loan or taken out before you receive the money.
For example, if you borrow £1,000 and there’s a 3% origination fee, you might only get £970 in your account. Many people aren’t aware of this fee until it’s too late, which can mess up your budget or leave you falling short of what you need.
Not all UK lenders charge an origination fee, so it’s worth shopping around and asking upfront. You should always read the terms carefully so you know exactly what you’re paying for.
At Salad, you won’t find any origination fees - the amount you borrow is what you’ll receive.
2. Prepayment Penalties
A prepayment penalty is a fee some lenders charge if you repay your loan early. While it might seem smart to clear your debt sooner, some lenders in the UK see this as a loss of interest income, so they charge you for it.
This hidden fee can vary depending on how early you pay off the loan and how much you still owe. For example, if you take out a five-year loan but pay it off in two, you could be hit with a fee for ending the agreement early.
These hidden charges in personal loans can leave you feeling stuck. That’s why, before signing any loan agreements, you need to carefully read the fine print and ask if there’s a penalty for paying off your loan ahead of schedule.
For fairer borrowing with no early repayment charges, explore our borrowing options and apply with Salad.
3. Late Payment Fees
Late payment fees are charges you face if you miss a loan repayment or don’t pay on time. Even being a few days late can lead to extra costs, and these loan fees can quickly add up.
Many UK lenders charge a flat fee for each missed payment, starting from £12 and going up from there. On top of that, a late payment could also harm your credit score, making it harder for you to borrow in the future.
That’s why, even though life gets busy, you need to stay on top of your loan repayment dates. You could set up a direct debit or reminders to help you avoid these hidden loan charges. You should also remember to check the lender’s policy on late fees before taking out a loan.
4. Processing Fees
Processing fees are charges that some lenders add for handling your loan application and paperwork. This hidden loan fee is usually a flat amount or a small percentage of the loan, and it might not be clearly mentioned upfront.
Unlike the origination fee, which covers setting up the loan, a processing fee is often just for reviewing and managing your application. While these personal loan hidden charges might not seem like much, they can end up adding significantly to the overall cost of borrowing.
Some lenders may include it in your total loan amount, while others may expect you to pay it separately. The best way to avoid, or at least prepare for it, is to read the fine print and ask if there are any processing fees involved before agreeing to a personal loan.
For Affordable Personal Loans With No Hidden Fees, Choose Salad
Now that you understand the common types of hidden charges in personal loans, you’ll know how to protect yourself from paying more than you should. If you want a loan with no hidden costs and no early repayment fees, we’re here to help.
At Salad, we offer affordable loan options for all employed UK citizens, regardless of their credit score history. As one of the UK’s leading online lenders, we understand that the credit score system isn’t always fair. That’s why we use an open-banking-based assessment to evaluate the financial situation of every applicant.
We’re an FCA-regulated and authorised organisation, so you can trust us to keep your financial data safe. With our ‘More Than Your Score’ loans, you can get the financial assistance you need.
To learn more about our personal loans, click here, and to read more blogs like this one, visit our blog page now.
