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In Summary
Penal Charges: How They're Calculated
Not every secured loan charges late fees the same way, and you have real protections under RBI's rules, so check your specific charge against both your loan agreement and those standards, rather than assuming any figure you see is automatically correct.
- A late fee must be a separate, disclosed charge, not hidden interest. RBI requires it to be treated apart from your interest rate and clearly set out in your loan agreement or Key Fact Statement
- It can't compound on itself. A penal charge shouldn't generate further interest, if you see interest calculated on a late fee itself, that's worth questioning
- There's no universal rate to compare against. Each lender sets its own policy, so a figure you've seen elsewhere may not apply to your specific loan
- A charge that doesn't meet these standards is worth raising. If something looks disproportionate or unclear, that's a legitimate basis for a query, not just something to accept
Check your Statement of Account in My Account or the Bajaj Finance App for any late fee or penal charge, compare it against your loan agreement, and raise a query if it doesn't look reasonable, disclosed, or correctly separated from your interest.
What are late fees and charges for a secured loan?
Late fees and charges for a secured loan refer to applicable amounts that may become payable when a scheduled repayment is not completed within the required timeline as per the loan agreement. These charges are determined based on the applicable loan terms and conditions linked to your account.
A secured loan involves regular repayments through scheduled EMIs or instalments. If a payment is delayed, the loan account may continue to show pending dues along with any applicable charges. Checking these charges helps you stay informed about your loan obligations and manage your repayment schedule effectively.
What are your rights when a late fee is charged?
Under RBI's Fair Lending Practice framework, penal charges for late payment must meet specific standards:
- Reasonable and disclosed: The charge must be reasonable and clearly disclosed in your loan agreement or Key Fact Statement, not something that surfaces unexpectedly
- Separate from your interest rate: A penal charge cannot be added to your contracted interest rate or called "penal interest", it must appear as its own distinct charge
- Cannot compound on itself: A penal charge should not generate further interest on itself, it stays a fixed, standalone amount
If a charge on your account doesn't meet these standards, that's a legitimate basis to raise a query, not something you need to accept without question.
How to check secured loan late fees and charges
Through My Account or the Bajaj Finance App
- Sign in using your registered mobile number and OTP
- Select your secured loan account
- Check your Statement of Account or E-Statements for any charges shown as late fees, penal charges, or bounce charges
- Compare the charge date and amount against your repayment history
Also check your loan agreement or Key Fact Statement for the specific terms governing charges on your account.
What causes late fees and charges on a secured loan?
Late fees and charges may apply when a scheduled loan payment isn't completed within the applicable repayment timeline. The specific reasons depend on your loan terms and payment status.
Common situations that may result in applicable charges include:
- Missed EMI payment: A scheduled EMI isn't paid by the due date
- Delayed repayment: The payment is completed after the scheduled repayment date
- Payment processing issue: A payment may not be completed or reflected as expected
- Unresolved pending dues: Amounts remain unpaid in the loan account
Review your loan account regularly and take appropriate action if any payment remains pending.
What determines the late fees on a secured loan?
The late fees applicable to your secured loan depend on your specific loan terms and repayment status. Check the actual amount from your loan account and documentation rather than estimating it from a general rate.
| Detail to check | Why it matters |
|---|---|
| Loan agreement | Sets out applicable charges and repayment terms |
| Payment due date | Helps establish whether a scheduled payment became overdue |
| Amount overdue | Shows the unpaid amount associated with the missed repayment |
| Account charges | Shows applicable charges recorded against the loan |
| Payment history | Helps you match payments with the corresponding loan entries |
Do not assume that a late fee is calculated in the same way for every secured loan, each lender's Board-approved policy determines the specific rate and basis for their loans.
Why should you monitor secured loan charges and payment records?
Regularly reviewing your charges and payment records helps you track pending payments, understand applicable charges, and maintain accurate records of your loan transactions. Keep payment receipts, transaction details, and account information safely, so you can verify payments and address any differences between your records and your loan account.
Review your account after completing payments to confirm the information is reflected correctly. Staying updated helps you manage your repayment schedule effectively and take timely action when required.
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Frequently Asked Questions
Secured Loan Late Fees
Clearing Overdue – Secured Loans
What happens if secured loan late fees are not paid?
Unpaid late fees may continue to reflect as pending amounts in your loan account according to your applicable loan terms. Review your account details and take appropriate action to clear the amount before it accumulates further.
How can I check whether late fees have been added to my secured loan?
Sign in to My Account or the Bajaj Finance App, select your secured loan, and check your Statement of Account. Any late fee or penal charge should appear as a separate, clearly identified entry against your account.
Why are late fees shown separately from my regular EMI?
RBI requires lenders to treat penal charges separately from your contracted interest rate, rather than folding them into it. This is why your late fee appears as a distinct line item, it's a specific charge for non-compliance with a repayment term, not part of your regular interest calculation.
What documents should I check to understand secured loan charges?
Review your loan agreement, Key Fact Statement, repayment records, payment confirmations, and loan account details. These documents help you verify the applicable terms and confirm that a charge on your account matches what was actually disclosed to you.
How can I avoid additional charges on my secured loan?
Track your EMI due dates, make repayments within the scheduled timeline, and check that your NACH mandate remains active. Regularly reviewing your loan account for pending payments helps you catch and resolve a potential issue before a charge is applied.
What should I do if I find an incorrect charge on my secured loan?
Review your loan account details and payment records first. If the charge still looks incorrect, unreasonable, or improperly disclosed, contact the lender through an official channel and request a review, citing the specific terms you believe apply.
How are secured loan charges different from overdue payments?
An overdue payment is the scheduled amount itself that remains unpaid after the due date. A charge, such as a penal fee, is a separate amount applied because of that delay. Review your account to see both figures listed distinctly.
Where can I find details of my secured loan payment history?
Check My Account or the Bajaj Finance App under your secured loan's Statement of Account or E-Statements. Reviewing this regularly helps you track completed transactions, pending amounts, and any charges applied against your account.
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