What are the charges & fees on personal loans?

By BankBazaar | September 18, 2012

One of the biggest concerns while availing a personal loan is the variety of fees and charges that are associated with it. The total cost of loan goes up tremendously due to these allied expenses that come along with a personal loan whose rate of interest is already higher than the other loans. Therefore the customer has to carefully study all such additional charges while taking a personal loan to in order to be able to decide better on the actual utility of the loan.

The Processing Fees: This refers to administrative cost that is involved in processing and sanctioning the loan by the financier. Typically this amount varies from 0.5% to 2% of the total loan amount which is chargeable to the borrower. Most banks have a fixed minimum and maximum percentage of processing fees that can be levied on the borrower. The applicant pays this fee upfront or the same is deducted from the actual amount that is disbursed subsequently. Thus in a personal loan of Rs. 500000 the processing fee could be as high as Rs. 10000.

Verification Charges: The banks usually get the credentials of the applicant verified by hiring external agencies. The cost accrued from this verification process is generally passed on to the customer who pays it in the form of verification charges.

Penalty on Late Payment of EMI: The repayment of most of the personal loans is done through Equated Monthly Installment. In case the customer fails to pay up the EMI on time the financier levies an additional penal interest on the outstanding amount which may be to the tune of 2% per month. Thus defaulting on a personal loan can become a costly affair for the borrower.

Prepayment Penalty: Though it might sound a bit surprising the banks even charge the customer who wants to repay the loan ahead of the schedule. This is termed as pre payment penalty which may range from 2% to 5% of the outstanding amount that is being prepaid. This is charged since the lender would loose out on the anticipated interest that would have been gained by the continuation of the loan.

Duplicate statement Fees: In case the customer requires a duplicate statement of the payment schedule and balance of outstanding loan at any point of time the bank may charge an additional fee for providing the same. Typically such fee ranges from Rs. 200 to Rs. 500 for a single time duplicate statement.

Service Tax: Any service that is provided by the bank to the customer against the payment of a fee attracts an additional service tax of 12.5% which is also borne by the customer.

The banks have powers to waive off a majority of these additional charges if the customer can bargain well with the concerned authority. The sum total of all these allied charges can substantially increase the amount repaid by the borrower by the end of the tenure. Thus it is in the best interest of the customer to carefully all such fees and charges while taking the personal loan.

All information including news articles and blogs published on this website are strictly for general information purpose only. BankBazaar does not provide any warranty about the authenticity and accuracy of such information. BankBazaar will not be held responsible for any loss and/or damage that arises or is incurred by use of such information. Rates and offers as may be applicable at the time of applying for a product may vary from that mentioned above. Please visit www.bankbazaar.com for the latest rates/offers.

12 thoughts on “What are the charges & fees on personal loans?

  1. somit kumar

    Dear sir personal loan interest rate is very high so please down the interest rate is low

    Reply
    1. Team BankBazaar

      Hi Somit Kumar,

      Thanks for writing to us. You can check and compare the latest Personal Loan rates here.

      Reply
  2. K.bramham

    Sir I need personal loan N mounrt of Rs.2.5. Lakhs in 4 years period presently I mam working in Mahita Ngo my monthly salary o is Rs.24200

    Reply
    1. Team BankBazaar

      Hi Bramham,

      We have a host of Personal Loan offerings. Please click here to compare and apply for a Personal Loan.

      Reply
    1. Team BankBazaar

      Dear Bramham,
      Thanks for writing to us. You could apply for a Personal Loan on the BankBazaar our website. In just a few steps, you will be done with the whole process and if everything goes right, you will get your personal loan in a few days.

      Click here to apply for a Personal Loan.

      Cheers,
      Team BankBazaar

      Reply
        1. Team BankBazaar

          Dear Bramham,
          Thanks for writing to us. If you would rather contact our customer support instead of applying for a loan on our website, here is our customer service number +91 44 66511800. We are available Monday-Saturday from 9AM to 6PM. You can also add us on WhatsApp (+91 98848 08231). We would love to be of service and help you get your loan.

          Cheers,
          Team BankBazaar

          Reply
    1. Team BankBazaar

      Hi Arzoo, BankBazaar is not a bank and we don’t charge anything if you apply for a Personal Loan through us. Cheers, Team BankBazaar

      Reply
    1. Team BankBazaar

      Hi Arzoo, I hope we’ve answered your query. Have a nice day! Cheers, Team BankBazaar

      Reply

Leave a Reply

Your email address will not be published.