7 essential personal loan charges you should keep in mind
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7 essential personal loan charges you should keep in mind

  • Highlights

  • Compare and choose loans with a nominal interest

  • Select lenders who charge a low processing fee

  • Be aware of penal interest and bounce charges

A personal loan comes with different charges and fees. It is important for you to be aware of these, so that you can compare loan options and assess their affordability. Doing this exercise also allows you to prepare your finances so that you can be prepared for these charges.

Here are seven essential personal loan charges you should be aware of.

Interest rate

This is the rate at which you can avail your personal loan. In other words, the interest is the cost at which the funds are provided to you. This rate will vary from one lender to another and it is worth your while to pick a loan with a low interest rate. For example, when you take a Personal Loan from Bajaj Finserv, you can benefit from a low interest rate, along with features like a long tenor and easy prepayment terms that make the loan even more affordable.

Processing fee

This fee covers all the processing costs of your loan. This includes the administration and resource cost, and is subject to your lender. This fee is usually around 2% of your loan, but may be higher depending on the lender you choose. It is directly deducted from your sanctioned loan amount before it is transferred to you.

Penal interest

Skipping EMI payment deadlines means that you are liable to pay penal interest. This works like a late payment penalty and in most cases you will be charged 2% over your current interest.

Additional Read: 5 Important Things To Know Before Taking A Personal Loan

EMI bounce charges

This charge is levied when your EMI cheque bounces. In most cases you will be charged around Rs.1,000 per bounce. To avoid paying this charge, ensure that you plan for repayment and create a dedicated account from where your EMIs will be deducted.

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Secure fee


Most lenders allow you to sign into an online account to view your loan details and make requests or payments. As a result, lenders charge a fee towards the maintenance of online security systems, to ensure that your credentials and sensitive information is secure and protected. This is a one-time fee that will cost you around Rs.4,500.

Prepayment charges

You can make prepayments towards your principal and bring down the loan amount and also the value of subsequent EMIs. But, lenders often levy a fee on prepayments to make up for the loss of interest. This can amount to 2% of the amount you prepay and is subject to taxes.

Foreclosure charges

Similarly, lenders charge you a fee in case you decide to foreclose the loan before the tenor lapses. Typically, you can foreclose your loan after one month from the date of disbursal and you will have to pay 4% as a foreclosure charge on the outstanding amount.

It is important to note that these charges vary from lender to lender. While some lenders will implement all of these charges and also charge you to view interest statements, for example, others will only charge a few. So, select a lender that levies the least charges to get more from your loan.

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