Personal Loans can be lifesavers in an emergency. They provide an easy avenue to raise funds without a collateral. Despite having a higher interest rate than secured loans, Personal Loans are increasingly in demand by customers. They are easy to apply for and are quickly processed, with the sanctioned amount deposited within a few days in the borrower’s account.
So, if you need a quick and easy loan, a Personal Loan is a fine choice. However, before making the final decision, take into consideration all the fees and charges involved in the loan.
Cost of a Personal Loan
When shopping for a loan, it is important to compare Personal Loan interest rates. There are many lenders who have very few Personal Loan processing charges and fees.
Personal Loan Fees and Charges
From the time you apply for the loan, the charges begin ticking:
- First comes the loan processing charge which may be upto 2% of the loan amount. This processing charge is non-refundable, even if you decide not to take the loan
- The lender could charge you a penalty for cancellation of loan after it has been sanctioned, and it could be a percentage of the loan amount, or a fixed amount
- If your EMI bounces, that is, your PDC or ECS bounces for any reason, you would be charged a penalty for each bounce
- You may also incur late payment penalty if your EMI payments are delayed
- If you want to reissue a PDC or you want to change payment mode from PDC to ECS or vice versa, the bank or NBFC may charge an additional fee.
- If you decide to foreclose the loan, you would be levied Foreclosure charges that could be up to 3% of the outstanding loan amount, plus service charges
- Many banks don’t allow part-prepayments on Personal Loans. If a lender allows this facility, you may incur part pre-payment charges each time you use this facility
- If you request duplicates of documents like your Amortization Schedule, you could be charged a fee for this
- If you want duplicates of NOC and No Dues Certificates, these could also cost you extra fees
There might be other fees and penalties that could vary from one lender to another. So, besides the interest rates, you should also factor in all these costs when you apply for any loan, not just a Personal Loan.
Read up on loan options, rates, service fees and charges before applying for a loan. Compare Personal Loan Rates India on financial websites, and also compare the hidden costs in these loans. Choose the Personal loan offer that comes at lower rates of interest and also involves less charges and penalties. As Personal Loans are unsecured loans, they could be a little expensive. If you can find banks or NBFCs who offer loans that come with less hidden charges, you could save on the overall cost of the loan.
Also, read: Rebuild your Credit Score with a Personal Loan