Personal Loan Charges: What You Need to Know

When it comes to meeting certain personal expenses, there is no better option than borrowing a personal loan. Personal loans offer a fixed amount to borrowers, for a fixed time period, at a fixed rate of interest.

While personal loans seem to be an easy option for borrowing money in times of need, it is important to consider the fact that taking personal loans involves more expenses than you’d think. Additionally, there are chances that the lenders may not highlight such hidden expenses to you at the time of application for the loan. Hence, it is vital for you to keep a close eye on these additional charges and fees on personal loans and be prepared for them beforehand.

Here are all the additional personal loan charges that you must look for, as you apply for a personal loan.

Personal Loan Charges

All the personal loan charges and additional fees have been listed in detail below. It is advised that you keep a close eye on each one of these expenses before applying for the personal loan.

  1. Personal Loan Processing Fee

The personal loan processing fee is actually borne by the bank for administrative expenses. The amount of this processing fee varies somewhere between 0.5% and 2.50%, varying from bank to bank. Even though this personal loan processing fee is borne by the bank at the moment, the bank charges the expenses from the borrower later on.

  1. Verification Charges

Since most personal loans are unsecured, banks need to verify the borrower’s repayment capacity before actually giving out the loan. To do so, banks usually hire third party agencies that are responsible for verifying the borrower’s credit score and credit repayment pattern. For doing this job, these agencies charge a fee from the bank, which is eventually borne by the borrower.

  1. Goods and Services Tax

GST or Goods and Services Tax is a small fee that is to be paid by the borrower for any additional services required in the process of the loan’s sanction or during the period of repayment of the loan.

  1. Late Payment Penalty

When you borrow a personal loan, you are entitled to pay fixed monthly instalments in the form of EMIs as a means to repay the loan amount in parts. These equated monthly instalments must be paid on the pre-decided date. If, somehow, the borrower fails to do so, then he/she will have to pay a penalty for the late payment of EMI. Hence, it is strictly advised to calculate the EMI amount before borrowing the loan and to calculate your finances accordingly.

Pro Tip: Borrowers have an option to decide their EMI amount. If your budget does not allow you to pay huge instalments every month, then you can also choose to have a lower EMI and pay these instalments for the longer term.

  1. EMI Bounce Charges

If in case, the borrower misses an EMI, then he/she will be charged an EMI bounce fee as a penalty for missing an installment. This amount is levied by the lender on the borrower. The EMI bounce charges are somewhere around Rs. 1000 per installment.

Read More: Types of Personal Loans - Avail of them for a multitude of uses
  1. Personal loan preclosure charges

There are certain cases in which borrowers might want to pay their EMIs or pending loan amount prior to their actual due date. However, your bank may incur a loss if you decide to pay off the loan amount before the actual tenure ends. In order to suffice the loss, the bank asks for loan preclosure charges from the borrower. Generally, the loan preclosure charges range between 2% and 4%, varying from bank to bank.

  1. Duplicate statement fees

If you ask the bank to generate a duplicate statement of your payment schedule or your loan’s outstanding balance. This fee for a duplicate statement costs somewhere between Rs. 200 and Rs. 500 to the borrower, depending upon the banks.

  1. Online convenience fees

With the ease of technology, customers have access to all their statements and loan-related information online. To provide these online services, banks charge an online convenience fee of around Rs. 2500 from their borrowers.

  1. Part pre-payment charges

Certain favorable financial situations like receiving bonuses, etc. may put you into thoughts of pre-paying your loan installments or a part of your personal loan. However, before you decide to pre-pay a part of your personal loan, you must be aware of the part pre-payment charges applicable on personal loans. You will have to pay a charge of 2% plus taxes on the part pre-payment amount. Additionally, it must be noted that you are allowed to pre-pay a part of your payment only if the amount is greater than at least the amount of one EMI.

FAQs
Are there any additional charges and fees applicable on personal loans?
Yes. Apart from interest charges, there are multiple other charges applicable on personal loans. These charges include personal loan processing fees, part pre-payment charges, online convenience fees, personal loan preclosure charges, late payment penalty, EMI bounce fees, etc.
Can I make part pre-payment of my loan amount?
Yes, you can make part pre-payment of your loan amount. However, you must note that you will have to pay additional charges for doing so. These charges may range somewhere around 2% of the part pre-payment amount, plus applicable taxes.
Will my bank provide me a duplicate statement of my account?
Yes, upon special request, you can ask your bank for a duplicate statement and outstanding balance of your loan amount. However, to do this, you will have to bear additional charges of Rs. 200 to Rs. 500, varying from bank to bank.
Is it possible to get my loan details online?
Yes, you can get all your loan details online on your account on the bank’s official portal. However, you must note that the banks charge an annual convenience fee for operating your account online. This fee is around Rs. 2500.
0 Shares:
You May Also Like
Read More

What is a Self-employed Personal Loan?

Self-employed personal loans are actually personal loans for self-employed individuals. These self-employed professionals can be business persons, shop/factory…