A personal loan comes with several fees and charges. 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.
Listed below are the essential personal loan charges you should be aware of:
Interest rate
This is the rate at which you can avail of your personal loan. In other words, the interest is the price at which the funds are provided to you and adds to the overall cost of your loan. This rate will vary from one lender to another and it is worth your while to compare lenders and pick one offering a low interest rate. For example, when you take an instant personal loan from one of India’s leading NBFCs i.e. Bajaj Finserv, you can benefit from a low interest rate, along with features such as a long tenor and easy prepayment terms that make the loan even more attractive.
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. The processing fee is usually up to 3.93% of your loan amount (exclusive of taxes), 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
Paying your EMIs post due dates attracts penal interest. This works like a late payment penalty and in most cases, you will be charged 3.50% per month over your current EMI.
Additional Read: 6 Important Things To Know Before Taking A Personal Loan
EMI bounce charges
This charge is levied when your EMI bounces. In most cases you will be charged around Rs. 700 to Rs. 1,200 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.
Document or Statement Charges
Reputed private financiers like Bajaj Finserv, let you download your e-statements, letters and certificates at no extra cost from their customer portal. You can also procure a physical copy of your statements/ letters/ certificates/ other documents from any of our branches.
Part-prepayment charges
You can make part prepayments towards your principal and bring down the loan amount and also the value of subsequent EMIs. However, lenders often levy a fee on part prepayments to make up for the loss of interest. This can amount to 4.72% (inclusive of applicable taxes) of the amount you prepay and is subject to taxes. With a Bajaj Finserv Flexi Personal Loan, these charges are, however, nil.
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 up to 4.72% (inclusive of applicable taxes)
It is important to note that these charges vary from lender to lender. While some lenders will implement all these charges and may also charge you to view interest statements, others may levy a few. So, select a lender that levies the least charges to get more from your loan.
Read More: Differences between flat and reducing interest rate
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