Hidden fees on Retail loans in Jordan

Dec 16, 2019 by Ramez Nabulsi

In the age of Modernity, every needed service requires paying fees, especially when related to finance and banking. Hence why loan installments are seen by the borrower as a heavy burden on the back, it’s always recommended to verify all additional fees as it may accumulate thus result in more and more expenses.

Perhaps it’s not possible to avoid all fees, but certainly reducing expenses is a doable thing in the long run. And that is what we call the struggle of our life; the never-ending endeavor to maximize income and to minimize the cost! 

What’s the solution then?

Once you ensure that you are in compliance with all credit requirements, the following step shall require filling an application form. It’s highly advised to pay attention to all little details related to any potential fees as you take your final step towards signing a loan agreement.

In order to make the life of those who are seeking a loan to borrow easier, the following will come across as the most common additional fees pertaining to loans in Jordan:

1) Commission fee: This fee is paid only once when the loan is established, it comes with a percentage of 1% from loan’s gross value. It may consist of other fees that are deducted regularly, these fees are enforced on all type of loans whether personal car or housing loan.
2) Early settlement fees: The value of this fee reaches 1% from the remaining amount of the loan, it is paid usually if the remaining period of the loan is less than one year, it applies to all retail loans. In some cases, this fee is enforced if the remaining period of the loan exceeds 1 year depending on the bank or the lender party.
3) Top-up fees: Sometimes the consumer wants to extend the loan period, so the loan maturity period extends to 10 years instead of 5. In this case, the amount of monthly installment will be reduced to meet with the new extension. The top-up fees are up to 1% of the gross loan value to be paid once.
4) Late payment fees: These fees are deducted from the borrower who is late in paying the minimum installment fees due to the assigned deadline. In order to avoid such a scenario, make sure you pay the minimum amount on the right date.
 5) Amending finance conditions fees: Includes all fees paid by the borrower to the lender in case of waiver or upon agreeing on amending the agreement or amending the required financial documents, the value of this fee doesn’t exceed 5 JDs only.
6) Mortgage release fees: This occurs in case of a housing loan when the borrower pays the whole property value so that the property transitions from the landlord to the borrower. These fees are paid by the lender (the bank) for the purpose of adopting the responsibility of all managerial expenses resulting from amending the mortgage status in any governmental entity of concern like the land registration department. This fee applies to cars and housing loan too; the value of the fees is no more than 10 JDs.
7) E-Services Commission: This commission is enforced in case of paying online over the internet through the credit card, it only requires paying half JD monthly!
8) Stamps fees: Applies to all kind of loans with a percentage of 0.003 from the loan’s gross value, thus it goes to the government treasury as contract ratification fees. Some Jordanian banks pay these fees on behalf of the client.
9) Appraisal fees: In case of housing loan, the involved bank sends independent appraisals to estimate the value of the property, so if the property value exceeds 100 thousand JDs the bank sends two representatives to estimate it, otherwise one representative is enough to figure out the value. Each one earns from 50 to 200 JDs and the fees goes to his pocket directly.
10) Registration fees:  In case of housing loan, these fees go directly to the Land and Survey Department which is a governmental entity, the value of this land reaches 9% from the property value. The borrower is exempted from it when the property space is less than 150 square meters.
11) Mortgage fees:  Also this fee goes to the government treasury, its percentage of value is 0.001 from the property value.
12)  Life and Property Insurance fees: These are mandatory fees enforced on all types pf all loans (property insurance is enforced on car and housing loans), usually the value of each insurance fee doesn’t exceed a few JDs per month.  

Finally, hope this read has been helpful in acknowledging all hidden fees on retail loans. Remember, always strive to learn more about all loan aspects, as the devil always lies in the details!