Personal Loan

The Fees Associated With A Personal Loan Must Be Taken Into Account


Are you looking forward to getting a personal loan? Before you do so, here’s what you need to know. 

personal loan is an instant way of availing yourself of funds to fulfil your financial needs. Personal loans are easily available today and require minimal documentation but no collateral. However, some additional charges associated with the personal loan must be taken into account to avoid any future surprises from extra expenses. Read on about these personal loan charges in detail to save yourself from any future disappointments.

Personal loan fees and charges

Consider the following personal loan charges before applying for a personal loan:

  • Processing Fee: A processing fee for a personal loan is an amount that the bank charges while processing a personal loan. The fee generally covers the administration costs of the application process. The processing fee for a personal loan varies from bank to bank. A borrower can choose two ways to pay the processing fee for a personal loan:
  1. Paying the processing fee right away during the application process.
  2. Having the processing fee subtracted from the loan amount at the time of disbursal of the loan.
  • Default Charges: The banks allow you to repay the loan amount through equated monthly instalments (EMIs). A default penalty is charged if you fail to pay the EMI amount on the default date of the month.
  • Prepayment Charges and Foreclosure Charges: The banks earn money through the loan interest you pay. In some cases, the borrower may repay the amount before the stipulated tenure, which may incur a loss to the bank. The banks apply prepayment or foreclosure personal loan charges to recover this loss.
  • Part-payment Charges: The banks give you the option of making partial payments on the loan amount. You can make a part-payment (an amount greater than EMI) after a specified number of instalments have been paid in full by the borrower to the bank. The advantage of doing so is that it reduces the EMI and interest amount. However, when you make the partial payment, the bank bears the loss of reduced interest. That’s why the banks apply part-payment charges to the borrower.
  • Duplicate Statement Charges: You can ask your bank for a duplicate statement of your payment schedule if you need one or if you ever lose track of the total amount of your outstanding loan debt. If you pay a small fee called “duplicate statement charges” to your bank, you can get these details.
  • Verification Charges: The banks hire a third party (an agent). The agent verifies the credentials of the applicant and assesses the repayment capacity. An applicant bears this extra charge of the application process as a “verification charge.”
  • Goods and Services Tax: A small fee called Goods and Services Tax, or GST, must be paid by the person who wants to borrow money during the loan approval process or while paying back the loan.
  • Loan Cancellation Charges: A loan amount may be cancelled by certain applicants after it has been approved or disbursed. The applicant must pay a loan cancellation charge, which varies from bank to bank.
  • Change of Loan Repayment Mode: You will have to bear a processing fee for a personal loan if you want to change the mode of repayment, for instance, from EMIs to lump-sum repayment (amount).
  • Other charges: Some additional personal loan charges may include legal charges, statutory charges, stamp duty, documentation charges, bounced cheque charges, etc. These charges vary from bank to bank.

Personal Loan Fees and Charges At Piramal Finance

Schedule of Fees & Other ChargesDetails
Processing Fees.Up to 4 % of the Loan amount + applicable taxes (payable before disbursement of Loan).
Default Interest.2% p.m. on default of PEMII/EMI from the date of default till the date of actual payment. 
Documentation Charges.Up to 0.5% of loan amount + applicable taxes repayment.
Prepayment charges.Up to 5% of the Principal amount + applicable taxes.
Part Payment Charges.Up to 5% of the Principal amount + applicable taxes.
Cheque Bounce Charges.Rs. 500/- + applicable taxes.
Collection pickup charges.Rs. 250 per visit + applicable taxes.
Any Legal costs/charges.At actuals + applicable takes.
Recovery-related charges.At actuals + applicable taxes.
Stamp duty charges.At actuals + applicable taxes.
Statutory Charges.At actuals + applicable taxes.
Loan Repayment Schedule (only applicable for a physical copy of the statement). 500/- + applicable taxes.
Change of Loan repayment mode.500/- + applicable taxes.
Duplicate No due Certificate issuance charges (only applicable for a physical copy of statement).500/- + applicable taxes.
Statement of Account (only suitable for a physical copy of the statement).500/- + applicable taxes.
Cash collection charges.1% of collection amount of Rs.50000 and above in cash + applicable GST.

Personal loan charges FAQs

Q1. Should I pay the loan application fee upfront?

Never pay a loan application fee upfront. A licenced lender will never demand an upfront payment from a borrower.

Q2. Is it possible to make partial payments on personal loans?

Yes, partial payments are accepted for some personal loans. It is only permitted once a specified number of instalments have been paid in full by the borrower and come with apart-payment charges

Q3. Can failure in loan repayment impact my credit score?

Yes, failure to repay a personal loan will lower credit scores and limit one’s future access to credit.

In conclusion

The best way to meet your financial needs is with a personal loan. But if you or someone you know wants to get a personal loan, you need to be aware of a few personal loan charges that ease your journey right from the application process to the repayment period. The processing fee for a personal loan is the administration cost charged by the banks during your application process. Beware of the extra personal loan charges that may bring future surprises if not known initially. Piramal Finance gives you access to a hassle-free personal loan by disclosing all the personal loan charges at the time of the application process. Apply for a personal loan, or call 1800 266 644 to learn more.