When taking a personal loan, it is very important to know about some fees and charges. Understanding these fees can make financial planning easier for you and help you avoid unexpected expenses. Here are some specific fees and charges that should be kept in mind when taking a personal loan.
1- Processing Fee
This fee is charged by the bank or financial institution during the processing of the loan. It is usually 1% of the loan amount, which can go up to 3% and sometimes this amount can be in the minimum range.
2- Prepayment/Foreclosure Fee
If you repay the loan amount early, that is, before the pre-determined period, then some institutions charge a fee for this. This fee can usually range from 2% to 5% of the loan balance. In some banks, this fee is not applicable at all, especially if you have repaid a part of the loan.
3- Late Payment Fees on EMI
If you do not pay your EMI on time, the bank or lender may charge a late fee. This fee is decided by the bank and can vary depending on your EMI. This fee can usually range between ₹500 to ₹2000.
4- Check Bounce Fees
If you are paying the loan EMI through cheque and the cheque bounces, the bank may charge you a bounce fee. This fee can range from ₹200 to ₹500. This also depends on your bank, you may be charged more.
5- Insurance Fee (Loan Insurance Fee)
Some banks charge a fee for taking an insurance policy on personal loans. Its purpose is to protect the loan amount from risk. This fee depends on the loan amount and the insurance policy.