There are certain charges you need to pay when you take a personal loan. A loan is not just about paying back the money with interest. There are also a few extra costs, which you are required to pay before and during the loan. One important charge is the loan processing fee. This is a fee that lenders usually take for processing your details and setting up your loan.
Along with this, there are certain other loan charges as well that you should know about. In this brief guide, we will help you know what these charges are and what they mean.
What is the Processing Fee for a Loan?
The loan processing fee is the amount a bank or loan app takes for handling your loan request. It is usually a small percentage of the loan amount you are taking. For example, if your loan is ₹2,00,000 and the processing fee is flat 2%, then you may have to pay ₹4,000 as the processing fee. Now, this fee is taken by the bank or the lender to check your documents, verify your information and get everything ready for loan approval.
Why Do Lenders Impose Loan Processing Fees?
No lender would give you the loan money right away. There is a structured process involved in the approval of the loan. There are numerous checks, verifications and more before the loan is approved. To cover the cost of all this, they charge a loan processing fee.
- To check your credit score and background.
- To verify your ID and income documents (like Aadhaar, PAN, salary slips, etc.).
- To use their team and systems to process the loan.
- To keep a record of the loan.
Charges Associated with Personal Loans
Apart from the loan processing fee, there are several personal loan charges you are often required to pay. Here are some common ones:
- Prepayment Charges: If you make a part payment on the loan before the end of the loan tenure, some lenders may charge a fee.
- Late Payment Fee: If you miss an EMI or payment, you need to pay a penalty.
- Bounce Charges: If your bank account does not have enough money for EMI, a charge may be added.
- Loan Foreclosure Charges: If you close your full loan early, this fee may apply.
- Document Fees: Some banks may charge for things like loan statements.
Also Read: Personal Loan Interest Rates in India
Why Is Being Aware of Personal Loan Fees Essential?
It is important to know all the personal loan charges in advance because:
- You would then know the real cost of the loan, not just the interest rate.
- You would be able to compare loans between banks or apps.
- You would not have to pay any surprise charges later.
- You can then easily plan your budget over the loan tenure.
Conclusion
A personal loan is helpful when you urgently require money for your personal needs. It can be for travel, medicine, a wedding, car repair, etc. Make sure you avail the personal loan at a competitive interest rate and with transparent charges, so you do not have to pay any surprise fees later on.
CASHe offers instant personal loans of up to ₹3 lakh, with a quick and simple online process. There are no hidden charges, and you get the loan at competitive interest rates. Apply on the CASHe app and get the loan approved within minutes.
