A personal loan can be a great financial tool. It helps you deal with emergencies like hospital bills or sudden expenses. It can also a festival, or even that long-awaited holiday.
You might also take a personal loan to buy a gadget or appliance that makes life more comfortable. But while hey come with several charges that many people are not fully aware of.
Let’s break down the main fees and charges in simple terms so you know exactly what to expect.
This is the fee banks charge to handle your loan application. It covers paperwork and checks. You usually pay it upfront or it gets cut from the loan amount before it’s given to you. This fee is often 1% to 5% of your loan.
Meanwhile, some banks may offer a discount or waive this fee during special offers or if you have a good relationship with them. It’s always worth asking.
Banks check your credit score and personal details to judge if you’re trustworthy. These checks cost money, and the bank passes that cost to you as verification charges.
Every loan has a fixed EMI date. If you miss this date, the bank charges a late fee. To avoid this, always keep at least one EMI’s worth in your account before the due date.
If you want to change your EMI date or switch the bank account from which the EMI is debited, you’ll have to pay a small fee. This is charged for each request.
Need a copy of your loan statement? Most banks will give it for a fee. You can also check if it’s free online before asking for a printed version.
If your EMI doesn’t go through, maybe due to a low balance or a bounced cheque, This is called a bounce charge and is taken each time a payment fails.
Changed your mind after the loan was disbursed? You can cancel it within a set time (usually 15 days). But the bank may still charge interest for the days the loan was active, and the processing fee is usually non-refundable.
Some banks don’t charge cancellation fees if you cancel within the free-look period. Always check your loan agreement.
Many people only look at the interest rate when taking a personal loan. But there are several other costs that can add up. Knowing these charges helps you plan better, avoid surprises, and even negotiate some of them with the bank.
So, the next time you apply for a personal loan, read the fine print, ask questions, and make sure you’re fully aware of the total cost.