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Personal Loan Processing Fee and Charges

Top Bank Personal Loan Charges

Last Updated 15th Jun 2021

  • Personal loan charges include processing fees, part payment charges, foreclosure charges, penalty on the late payment that affect the loan’s cost.
  • A processing fee on a personal loan is a one-time fee charged on the loan amount to process the loan application.
Bank Processing Fee Foreclosure Charges
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Overview

A personal loan is an unsecured loan that can be availed for unforeseen financial emergencies including expenses for marriage, health, travel, home renovation etc. The rate of interest on a personal loan is usually high, and as per the current rates, it starts at 10.25% However, apart from the interest rate, various other charges affect the costs of a personal loan. Processing Fee on a personal loan is one such cost related to the administration paid by personal loan borrowers to process and sanction loans. It is charged on the principal loan amount and varies across lenders. Along with that, banks & non-banking financial institutions also charge various other fees & charges on a personal loan including prepayment & foreclosure charges, valuation charges, penalties on late payment, goods & services tax etc.

Common Personal Loan Fees and Charges

The common charges on a personal loan are explained in the paragraph below:

  • Processing Fee: The processing fee on a personal loan is a one-time fee charged on the loan amount that may cost ranging from ₹ 999 to upto 2%. It varies from bank to bank and can be negotiated depending on your eligibility and relationship with the lender.
  • Verification Charges: The verification costs are charges that are passed by the lenders to the borrowers for verifying the repayment capacity of the borrower. It includes expenses related to hiring a third-party agent for checking the credit scores and credit history of the borrower.
  • Goods & Services Tax: Lenders also charge a small fee for any additional service that the borrower avails when sanctioning or repaying the loans. This fee is charged as a goods & service tax. On all banking services, a GST rate of 18% is applicable from July 1 2017.
  • Part Payment & Foreclosure Charges: If a borrower decides to prepay or close the loan account before the predetermined loan tenure, they have to bear fees for prepayment & foreclosure. Banks typically levy prepayment or foreclosure charges on personal loans that can range from Nil to up to 6% of the outstanding balance.
  • Duplicate Statement Fees: The bank charges the duplicate statement fees for providing a duplicate physical copy of the statement of the schedule of payment or outstanding balance of loan amount for more than the specified number of times.

Top Banks Fee and Charges in India

The table below provides the personal loan fees and charges of top banks in the country.

Bank Processing Fee Part Payment Charges Foreclosure Charges
SBI 1.00% Not Allowed Not Allowed
HDFC Bank Upto 2.50% Min Rs. 999 Not Allowed Not Allowed
ICICI Bank Upto 2.25% of Loan Amount Not Allowed Not Allowed
Bajaj Finserv Starting from 1.50%, Up to 3% Allowed at 2% Allowed at 4%
IDFC First Bank Upto 2.00% Not Allowed Not Allowed
Axis Bank Rs.4,999 Allowed at 1-12 EMI-5%, 13-24 EMI-4%, 25-36 EMI-3% & Above 36 EMI-2% Allowed at 1-12 EMI-5%, 13-24 EMI-4%, 25-36 EMI-3% & Above 36 EMI-2%
Tata Capital Upto 2.50% of Loan Amount Not Allowed Not Allowed
Fullerton India 2% Not Allowed Not Allowed
IndusInd Bank Min 0.75% to Max 1.75% Not Allowed Not Allowed
Kotak Bank Starting from Rs.1999 Not Allowed Not Allowed

FAQs

What is the processing fee for a personal loan?

A processing fee on a personal loan is a one-time fee charged on the principal amount of loan amount for processing and sanctioning of loans. It varies from bank to bank and may cost upto 2% of the loan amount.

What is SBI personal loan processing fee?

State Bank of India charges a processing fee of 1.00%. For defence pensioners, SBI, however, does not charge any fees for processing of a loan.

How is the processing fee calculated?

Banks charge a certain percentage of the principal amount of loans as a processing fee. You can calculate the processing fees as per the processing charge of your bank and loan amount.

What are the hidden charges in a personal loan?

Hidden charges in a personal loan include charges for late payment, part payment/foreclosure of personal loan, Goods and Service tax, duplicate statement fees etc.


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