Banking, Loans, Personal loan

Personal Loan Charges all information

Posted By: Admin
August 28, 2022 |

Know all personal loan hidden charges before applying, Read tips to get cheapest personal loan

Personal loan charges: Personal loan indeed is a friend in need. The loan is designed to cater the needs of the people when they require money which is not specifically categorized. These categories are home loan, car loan, education loan and other specific loans. Lenders monitor special category loan proceedings closely. Personal loan is granted to use in any way as desired by the customer and the end use does not really matter to lenders unless it is routed to bad activity. The loan is very popular among young people who have just started their career. Or among those who are not able to fulfil the requirement of banks to purchase a car or for touring, travelling, purchase of electronic gadgets like mobile, laptop and other. Based on good credit score and income parameters, lenders grant loans easily. Lenders also determine Personal loan charges on this basis.

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Most of the lenders are providing personal loans very quickly or say instantly to the account on just a click away. Being so easily available in the market, it has many hidden features which are not always informed to the borrower and come into the picture when they are levied and reflected in the loan statement. Processing charge is one of the Personal loan charges which is very common and all of us know about this. Generally Lenders inform well in advance to every borrower while loan processing about this charge. However, there are many other personal loan charges which you should know before availing a personal loan.

These charges are well described in this article.

Personal loan Processing charges:

Every lender for processing the loan, charges a certain amount of the loan quantum which is called personal loan charges for processing. It ranges between 0.5% to 2.5% of the loan amount. However, there are certain lenders which do not charge for processing, but they are providing less in comparison to lenders who are charging the fee.

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Personal loan Verification charges:

Almost every lender uses it to verify your background, income statements, employer, business address and financial statements. They also verify about other loan facilities if the customer had availed in the past. For this purpose, generally, lenders rely on third party services which are certainly chargeable to the lender, hence the lender charges a certain fee as verification charges. These Personal loan charges are generally very nominal, and the borrower does not hesitate to pay while availing the facility.

Applicable GST:

The goods and services tax is applicable to all the services provided by the lenders including loans; hence the lenders are charging the GST on services fees. Since it is mandatory no borrower can deny paying the fee.

Statement charges:

After the loan is processed and you run the loan for a certain period, a statement of loan is sent electronically or physically to your contact details whether it’s an email address or residence address whichever you have opted for while availing the loan. In case you need an extra copy of the statement or longer history, lenders generally charge for the service. This fee may vary bank to bank, and it can be charged per page also. Many banks are charging between 100/- to 500/- per statement exclusive of applicable GST.

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EMI default penalty:

This is something which you would never want to pay. The EMI default is very bad for the financial health of any borrower. Since it is very intensely monitored by credit history providers like CIBIL, Equifax and others, even a single EMI default may ruin your credit score sometimes. The history once marked can not be deleted and will mark a spot on your financial health. Here is the scope of another Personal loan charge. Lenders in case of EMI default charge heavily.

Generally, borrowers provide a copy of the bank cheque. Lenders use this to mark auto payment of EMI through ECS or NACH. Once the lender send the request to the linked bank where you have saving account, the responsible bank has to either honour it or deny it. The fees charged against EMI default is ranging between 100/- to 500/- per occasion exclusive of tax.

Personal loan Foreclosure charges:

When a lender has allotted its money to you as grant of loan, the lender forecast the income from the granted loan and prepare its financials based on that. If the borrower repays the amount prior to maturity, the lender has to recalculate the financials or has to search a new borrower for the same funds which would have routed income for some more time. Hence lenders generally charge for prepayment of the loans. However, in some of the government banks these Personal loan charges are not levied on borrowers. The fee charged towards this is very high in some cases and ranges between 2.5% to 5% exclusive of applicable GST.

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Interest Rate change charges:

The RBI from time to time announces modification in base rates. Banks decide their lending rates based on this base rate. Most of the bank consider RLLR (Repo Linked Lending Rate) as the base rate. Mostly the interest rate is fixed on the personal loans, but sometimes banks give the option to choose the lower interest rate to the borrower if the base rate is changed by the RBI. Sometimes lenders charge for availing this facility which ranges between 0.5% to 1% of the outstanding loan amount.

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Beware of hidden charges

To conclude, we advise you to opt for any borrowing after full satisfaction and enquiry about the charges. Some of the lenders are charging very high interest rates on personal loans. We skip to enquire about the interest rate in need of funds. This mistake we realize while repaying the loan. So beware and be aware.

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