Loans
The blog explains the various fees and charges associated with personal loan, including processing, verification, prepayment penalties, and GST, highlighting their impact on the total cost of borrowing.
Loan processing charges are non-refundable fees and cover administrative costs.
Pay verification charges incurred for verifying your credentials and creditworthiness.
Late EMI payments result in additional penalties.
GST Tax applied for any extra services during the loan period.
Prepayment/Foreclosure penalty if you repay the loan early.
A Personal Loan helps you achieve several of your life’s dreams and goals. These loans can be taken for innumerable reasons, whether you wish to fund your dream wedding or take off on an international trip, whether you want to buy a consumer durable or to pay off Credit Card debt. There is also no limitation to how you can use the funds. Your bank levies specific charges on this loan. Here are some charges you incur on a Personal Loan.
1. Loan processing charges
The bank has to bear some administrative costs while processing and sanctioning your loan. This is usually a small amount, which varies from bank to bank and typically costs about 0.5% to 2.50% of the total loan amount and is subject to change. Every bank fixes a minimum and maximum percentage of the loan processing fees, which the borrower must pay. You can pay this fee upfront or deduct it from the loan amount when disbursed. Remember that a loan processing fee is a non-refundable expense.
2. Verification charges
Before a bank can sanction your loan, they need assurance that you can repay it. To this effect, they hire an external agency to get your credentials verified. They check your credit scores and your loan repayment patterns. Since this is an added cost that affects the bank, the borrower must bear the accrued cost. This cost is regarded as a verification charge.
3. Penalty on EMI defaults
Banks allow you to repay the loan in small amounts through equated monthly instalments or EMIs. As a borrower, you must ensure that you have adequate funds to pay your EMIs on time. Failure to do so may result in you having to incur a penalty. That is why it is crucial to opt for an EMI amount you can afford, instead of trying to rush in paying off the loan. This is where a Personal Loan EMI Calculator is useful.
4. GST Tax
If the customer requires any additional service during the loan sanction or repayment period, he/she must also bear a small fee in the form of GST tax.
5. Duplicate statement fees
In case you require a duplicate statement of your payment schedule or you have lost track of the balance of the outstanding loan amount at any time, you can approach your bank for the same. Your bank can provide you with these details by charging a small fee.
6. Prepayment/Foreclosure penalty
Banks recover their money from the interest you pay on the loan. If you pay off your debt before the stipulated tenure, your bank may incur a loss, with you discontinuing your loan before the set tenure. Your bank may charge you a prepayment penalty to compensate for this loss.
Even with these charges, a Personal Loan makes a great financial assistance when needed. Know how a Personal Loan can be your saviour in the right situation.
Apply for HDFC Bank Personal Loan Online
*Terms & conditions apply. Personal Loan disbursal at the sole discretion of HDFC Bank Ltd.
For a seamless experience, check out our Personal Loan App.