Published Jun 18, 2026 4 Min Read

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What are loan fees and charges


Loan fees and charges are costs associated with processing, maintaining, servicing, or closing your loan. These may vary based on the type of loan, the lender’s policies, and regulatory guidelines.


Common loan categories:

  • Personal Loans
  • Wheels Loans
  • Business Loans
  • Loan Against Property
  • Overdraft Facilities

Common types of fees and charges


When you take out a loan, the total cost of borrowing involves more than just the interest rate. Lenders apply various fees at different stages—from the initial application to the final closure of the account. Understanding these common charges will help you manage your finances more effectively and avoid unexpected costs.
 

Here are the primary fees and charges you may encounter:
 

  • Loan processing fee: This is a one-off, upfront charge for evaluating your application. It covers administrative costs such as credit checks, underwriting, and documentation.
  • Documentation and verification charges: These costs are incurred during the process of verifying your KYC documents, income proofs, and any property papers required for the loan.
  • Prepayment or Foreclosure charges: If you decide to pay off your entire loan balance before the agreed tenure ends, some lenders may apply a foreclosure fee.
  • Part-payment charges: These may be applicable if you repay a significant portion of your principal amount outside of your regular EMI schedule.
  • EMI bounce charges: If an EMI auto-debit fails due to insufficient funds or other non-technical reasons, the lender will levy a penalty fee.
  • Penal charges: These are additional fees or interest applied when EMI payments are delayed beyond the agreed due date.
  • Stamp duty and agreement charges: These are mandatory government-regulated fees required for the legal execution of the loan agreement.
  • Legal and technical evaluation charges: Specific to secured loans (such as home loans), these cover the costs of inspecting a property’s legal title and physical condition.
  • Flexi facility fees: Some lenders charge a fee for the added flexibility of being able to withdraw funds or make part-payments as needed throughout the loan term.

Why these charges are important

These fees:

  • Ensure fair and transparent lending
  • Cover administrative and operational costs
  • Prevent misuse of credit limits
  • Help maintain service quality

 

How can customers stay aware of loan fees and charges


  • Check the Key Fact Statement (KFS) – This document highlights the total cost of the loan in simplified terms.
  • Read the Most Important Terms & Conditions (MITC) document – This document outlines all charges, interest rate details, repayment rules, and all terms and conditions. 
  • Review the loan agreement before acceptance - Ask questions before signing to avoid misunderstandings.

Documents that clearly mention loan charges

These are the primary documents customers should refer to:

  1. MITC – Most Important Terms & Conditions/Loan Agreement
  2. Key Fact Statement (KFS)


Related Loan Payment, Foreclosure and Account Management Guides

Bajaj Cibil Write Off Dpd And Enquiry Removal GuideOverdue Payment For Auto LoanDownload Noc For Secured LoanLoan Emi Payment For Secured LoanAdvance Emi Payment For Secured Loan
Download Unsecured Loan StatementBajaj Loan Foreclosure Charges And Waiver GuideBajaj Loan Emi And Mandate Change GuideChange Mandate Account Bajaj LoanBajaj Sold Loan Issues And Complaint Guide

Frequently Asked Questions

Why do lenders charge processing fees?

Processing fees cover the cost of reviewing, verifying, and approving the loan application.

Are all loan charges mandatory?

Not all charges apply to every customer. Some are situational (e.g., EMI bounce fee, foreclosure charge).

How can I avoid extra charges?

Maintain sufficient balance for EMIs, understand your agreement, and avoid late payments.

Where can I find all charges for my loan?

In your MITC, loan agreement, or lender’s charges webpage (https://www.bajajfinserv.in/all-fees-and-charges).

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