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Tata Capital > Blog > Personal Use Loan > Personal Loan Processing Fees and Charges – Explained

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Personal Loan Processing Fees and Charges – Explained

Personal Loan Processing Fees and Charges – Explained

Are you planning to get an instant personal loan to fund your dream wedding or meet urgent medical expenses? From funding vacations to paying college fees, a personal loan is a useful financial instrument that can help you make big purchases when you need them the most.

However, it is essential to remember that these loans often come with specific personal loan fees and charges.

Understanding personal loan fees and charges

When taking a personal loan, the interest rate is only part of the total cost. There are several additional expenses involved, which is why personal loan fees and charges are essential to know before you commit. These can include personal loan processing fees, prepayment or foreclosure charges, late payment penalties, and other minor costs.

Having a clear idea of these costs is essential for understanding loan costs and planning your finances effectively.

Also, read – What Are Personal Loan Foreclosure Charges?

Key personal loan fees during application and disbursal

Before your personal loan is approved and disbursed, several fees may apply. Here’s a detailed look at the charges you might encounter during the application and disbursal process:

Processing fees

A one-time non-refundable personal loan processing fee is levied on availing a personal loan at the time of application.

Penal or additional interest

Penal or additional interest is the rate of interest charged over and above personal loan interest rates as a penalty for delayed EMI payments.

Bounce charges

Bounce charges are part of personal loan fees and charges levied when you skip an EMI payment due to insufficient funds in your bank account.

Mandate rejection service charge

This is a personal loan charge levied upon rejection of any of the services rendered by the lending institution.

CCOD annual maintenance charges

When applicants apply for a personal loan under flexible funding options such as Cash Credit or hybrid term loan, the maintenance of such an account accompanies a fee known as the CCOD annual maintenance charge.

Outstation collection charges

In case the cheque deposited for EMI payment of personal loan has been made to a non-local branch of the lender, the borrower will be charged with a fee for the collection of such cheques known as the outstation collection charge.

Statement of accounts

The lender issues the Statement of Accounts for every personal loan applicant, which has a list of all transactions made from the applicant’s bank account for a given period. To issue this Statement of Accounts, lenders charge a fee for the hard copy, whereas the soft copy is free of cost.

Loan cancellation charges

If an applicant wishes to cancel their personal loan following the process of loan disbursal, the lender will levy loan cancellation charges.

Instrument swap charges

If an applicant wishes to swap or exchange their personal loan liability or their cash flow with a different financial instrument such as bonds or equities, they can do so after paying personal loan charges such as instrument swap charges.

Duplicate repayment schedule

Lenders issue borrowers a repayment or amortisation schedule – a table showing how the borrower’s personal loan has evolved. If a request is made for a duplicate schedule, the lender will charge a specific fee for the hard copy of the same, the soft copy being non-chargeable.

Duplicate NOC

If a personal loan borrower requests for a duplicate NOC or No Objection Certificate, the lender will require the borrower to pay a specific fee for the reissue.

Post-dated cheque charges

Personal loan fees are levied for post-dated cheques made for EMI payments. A post-dated cheque is one that mentions a future borrowing date.

Also, read – Personal Loan Interest Rate Comparison in India

How to compare personal loan fees and choose the right lender

Not all personal loans are the same. Lenders can differ significantly in their fee structures and additional costs. Understanding how to compare personal loan charges is essential to find the option that is truly affordable. Some lenders may have lower interest rates but higher personal loan processing fees or prepayment charges, so looking beyond the headline rate is important.

It’s also crucial to be aware of the hidden costs of personal loans, such as late payment penalties, documentation fees, or insurance charges, which can add up over time. By carefully evaluating these factors, you can make an informed decision and choose the best personal loan that fits both your repayment capacity and long-term financial goals.

Also, read – What Are The Types Of Personal Loan Interest Rates?

Conclusion

Being aware of personal loan fees and charges, including processing fees, prepayment penalties, and other hidden costs, is key to avoiding surprises and planning your finances effectively. By understanding these charges, comparing lenders carefully, and evaluating all costs involved, you can make an informed choice and choose the best personal loan that suits your repayment capacity and long-term financial goals.

Are you looking to apply for a personal loan online? If yes, then do so with India’s leading lending institution – Tata Capital. We offer personal loans for salaried individuals and self-employed.

Visit our website and check your eligibility, determine the right EMI using our online personal loan EMI calculator, submit relevant documents, and apply for an instant personal loan today!

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FAQs

What is the personal loan processing fee at Tata Capital?

Tata Capital charges a personal loan processing fee, usually a  of the loan amount, at the time of application. This fee is part of the broader personal loan fees and charges and covers verification and administrative costs.

 

 

Are there any hidden charges in personal loans?

Yes, apart from standard personal loan fees and charges, hidden costs may include late payment penalties, documentation fees, insurance add-ons, or prepayment penalties. Always read the loan agreement carefully to avoid surprises.

What are the personal loan foreclosure charges in India?

Foreclosure charges are part of personal loan fees and charges applied when you repay the loan before the scheduled tenure. These vary by lender and loan type and are usually calculated as a percentage of the outstanding principal.

Does GST apply to personal loan fees and charges?

Yes, GST is applicable on personal loan processing fees and other service-related personal loan fees and charges. Interest payments, however, are exempt from GST.

Can personal loan prepayment charges be waived?

Some lenders may waive prepayment charges, which are part of personal loan fees and charges, depending on the loan type or promotional offers. Check with your lender before making early repayments.

What is the impact of late payment penalties on my credit score?

Late payment penalties, part of personal loan fees and charges, increase your outstanding dues and can lower your credit score if reported to credit bureaus. This may make future loans costlier or harder to obtain.

What happens if my personal loan EMI bounces?

If your EMI bounces, you may incur penal interest and bounce charges, which are considered personal loan fees and charges. This can also negatively affect your credit score.

What is a pre-payment penalty for a personal loan?

A pre-payment penalty, included in personal loan fees and charges, is a fee charged for repaying your loan before the scheduled tenure. It compensates the lender for lost interest income.

Is it mandatory to pay a processing fee for personal loans?

Yes, the personal loan processing fee is generally mandatory to cover application and approval costs. The amount may vary from lender to lender.

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