Various Personal Loan Charges One Should be Aware About – Know Here!

When it is about mitigating personal expenditures or financial emergencies, personal loan is one of the prudent options you can opt for. It comes with no security requirement, minimal documentation, and quick disbursement features. However, all such features come at a cost. Often various personal loan fees & charges are avoided or, in most cases, not highlighted by the lender.

Read on to know various personal loan fees that you must be aware of:

  • Loan processing fees:Lenders are required to bear certain administrative expenses while processing your loan. Processing fees differ from lender to lender and may cost anywhere between 0.5 % and 2.50 % of the loan amount. Every lender has a minimum and maximum loan processing charge, which you must pay. You may either pay this fee upfront or choose to get it deducted from your disbursed loan amount.
  • Verification fees:Before a lender disburses your loan proceeds, they require to assure that you have the loan repayment potential. For this, they tie up with an external agency, who verifies your credentials. They review your credit score and your past credit repayment patterns to understand your personal loan As this is an additional expense for the lender, you must bear the accrued cost in the form of verification fees.
  • Penalty on loan EMI default: Lenders provide you the facility to repay the borrowed loan amount in small instalments through EMIs. Thus, it is your responsibility to make sure that you repay your EMIs by the due date. Inability to do so incurs huge penalties. Due to this reason, it is crucial to choose an EMI as per your repayment capacity instead of mindlessly opting for high personal loan EMI to lower your interest cost burden.
  • Duplicate statement fees: If you need to generate a duplicate statement of schedule of payment or unable to track the outstanding balance of your personal loan, you can visit the lender to avail the statement or information. Your lender will provide you with the asked details and in exchange will charge a nominal fee. This fee may range anywhere from Rs 200 to Rs 500.
  • Foreclosure or prepayment penalty:If you apply for personal loan on fixed interest rate, lenders may penalize you on part prepayments and foreclosures. Charges of part prepayment or foreclosure can go as high as 5 percent of the part prepaid or principal component, respectively. Note that there are also some lenders who do not permit part prepayment while others may permit part prepayment just after repayment of a preset number of EMIs. Personal loans on floating rate do not come with prepayment/foreclosure fees as RBI (Reserve Bank of India) has disallowed lenders from charging such fees on floating rate loans. Thus, if you are capable or planning to prepay your personal loan with surplus funds in the future, then you must always prefer a lender offering loan at nil or minimal prepayment fees and limitations.


While few charges like processing and verification fees are unavoidable, you can easily avoid other personal loan fees and make your EMI repayment a breezy affair. Additionally, when availing personal loans ensure to compare among lenders to avail the lowest interest rate possible as being an unsecured loan, personal loans have higher rate as compared to secured loan options. Proper research of various lenders through online financial markets can help you get a better rate as per your credit score, income, repayment capacity and other parameters.

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