Everything You Need To Know About Personal Loan Processing Fees
From FY2017 to FY2021, personal loan disbursals have increased by 3.8 times in volume. One of the many reasons for this high demand is the feasibility of this financial product. Reports say that around 41% of the borrowers consider the interest rate, 20% consider sanction duration, and 30% consider loan tenors as their primary criteria for selecting a lender. However, personal loan processing fees are another crucial parameter that impacts one’s loan-related decision-making.
Understanding processing fees on personal loans
Not many are aware that financial products, including personal loans, come with processing fees incurred to cover the cost of processing the credit until approval. These charges include administrative costs, credit checks, etc. Processing fees are mandatory to pay and can vary with lenders. Borrowers can make the payment in full or have the amount deducted from the actual loan during the sanction.
It is important to know these charges as they directly impact the total cost of borrowing. This also enables you to estimate APR or annual percentage rate. If you approach a reputed financial institute, it may charge a nominal rate of up to 4.13% of the total loan amount as personal loan processing fees. However, these largely depend on factors such as an applicant’s credit profile and the lender’s terms and conditions.
The financers may waive the processing fees partially or entirely in some instances, such as for borrowers with better eligibility and repayment capability, during festive offers, or for those holding higher CIBIL scores.
If your credit score is below 750, check out how to get a personal loan with a poor CIBIL score.
Other charges associated with personal loans
Besides processing fees, unsecured personal loans tag along certain additional charges, such as the follows:
- Rate of interest
Personal loan interest rates are the charges that lending institutions levy for borrowing the credit. It typically starts from as low as 13% with terms and conditions applied. This annual rate is calculated based on the total borrowed amount and forms a major part of the EMI.
- Penal interest
It is the penalty charged for delay in EMI payment. Leading financers levy a nominal rate of 2 – 4% every month. Penal interest continues to accrue from the default date until the outstanding EMI is received.
- Bounce charges
These charges are imposed in case NACH, ECS mandate or cheque for EMI payment bounces while repaying the personal loan. Note that borrowers need to make this payment along with the penal interest. You may have to pay between Rs. 600 and Rs. 1200 per bounce with trusted private financers.
- Statement or document charges
A physical copy of statements, letters, certificates and many important documents needs you to shell out statement charges of around Rs. 50. However, Bajaj Finserv Loan Statement can be availed online free of cost. All you have to do is access the customer portal using your login credentials. The Loan Statement charges for online copies are zero. A borrower simply needs to download the required statement from their customer portal.
- Part-prepayment charges
With a surplus, you can choose to part-prepay a significant amount and reduce your overall outstanding. This facility incurs a charge of 2% along with the applicable taxes. However, make sure you have paid at least one month’s EMI to enjoy the part-prepayment facility.
Besides the above, there are foreclosure charges and annual maintenance charges as well. Hence, before you apply for a personal loan, it is essential to know the various fees and charges applicable on the credit along with the ways to get the best personal loan rate.
Established lenders like Bajaj Finserv offer nominal interest rates and other associated charges to keep the cost of borrowing affordable. You can use their online EMI calculator to immediately evaluate the EMIs, total interest payable, and total cost of the loan. Once feasible, you can apply for a personal loan via an online application form and get the fastest approval.
Once you get all the charges, you can easily apply for a collateral-free personal loan from lenders like Bajaj Finserv via an online application.
Besides, existing borrowers can also avail of pre-approved offers extended by leading financial institutions like Bajaj Finserv on an expansive suite of financial products, such as business loans, personal loans, credit cards, etc.
Availing of these offers ensures minimal documentation and accelerated loan application. Customers can check their pre-approved offer by mentioning their name and contact information.
Individuals can ensure affordable interest rates and use a personal loan to meet their financial needs by keeping these factors in mind. Apart from these, individuals must check the interest calculation method.
Now that borrowers are aware of the factors that need to be considered for ensuring the lowest personal loan interest rate, they can conveniently apply for it online and meet their financial requirements with ease.
Additional Read: What Is Procedure to Apply for a House Loan