Personal Loan Processing Fee
A personal loan is one of the best means to help you meet any immediate financial needs, such as wedding, home renovation or repair, debt consolidation, vacation, medical expenses, and so on. However, apart from interest rate a personal loan comes with a personal loan processing fee, which is often non-refundable. A personal loan involves various other fees in addition to interest rate and processing fee which should be kept in mind before applying for the loan. Read on to learn about personal loan processing fee and all other charges associated with a personal loan to ascertain the affordability and overall cost of the loan.
Fees & Charges of Top Banks
| Banks | Processing Fee | Prepayment Charges | Late Payment Charges |
|---|---|---|---|
| HDFC Bank Personal Loan | HDFC personal loan processing fee is up to Rs. 4,999 | 2% to 4% | 18% p.a + applicable taxes |
| IDFC First Personal Loan | Up to 3.5% | Up to 5% | Up to 2% p.m. or up to Rs. 300, whichever is higher |
| Bajaj Finserv Personal Loan | Up to 3.93% | Up to 4.72% | 3.50% p.m |
| Kotak Mahindra Bank Personal Loan | Up to 3% + applicable taxes | Up to 4% + GST | 3% p.m |
| ICICI Bank Personal Loan | Up to 2.50% + applicable taxes | Up to 3% + GST | 24% p.a |
| Yes Bank Personal Loan | Yes Bank personal loan processing fee is up to 2% + applicable taxes | Up to 4% + applicable taxes | 24% p.a |
| Tata Capital Personal Loan | Up to 3% + GST | Up to 6.5% + GST | 3% p.m. + GST |
| SBI Personal Loan | SBI personal loan processing fee is up to 1.50% + GST | Up to 3% + GST | 2% p.m |
What are the Different Charges of Personal Loan?
Following are the different fees and charges related to personal loans which are common to most lenders:
- Processing fees: Lenders bear some costs related to administration at the time of processing a personal loan. To cover this cost they charge a processing fee that can go up to 3.93% of the loan amount sanctioned. The processing fee for personal loans varies from bank to bank. The applicant can either pay the processing fee straight away or get it deducted from the sanctioned loan amount at the time of its disbursement.
- Part prepayment & foreclosure charges: Part prepayment means paying off a part of your outstanding loan amount whereas foreclosure means paying off the entire outstanding loan amount in one go before the tenure ends. Paying off the debt before tenure ends can cause the lender to incur a loss. To cover the loss, the bank often charges a penalty for the prepayment (part and full), known as prepayment charges. This penalty usually varies between 2% to 6.5% of the amount prepaid and varies from bank to bank.
- Penalty on late EMI payment or defaults: When borrowers opt for a personal loan, they are required to repay the loan amount through EMIs (equated monthly installments). Borrowers have to make sure that they pay the EMIs on time. Defaulting or delaying the EMI payment attracts a penalty ranging from 2% to 3.50% per month on the missed/delayed EMI amount.
- Verification charges: Lenders have to be assured about the timely loan repayment capacity of the applicant before they sanction the loan. For this purpose, they carry verification of the borrower. They usually hire a third-party agency to verify the credentials of borrowers. These agents are responsible for checking the credit score and credit repayment pattern of the applicant. This extra cost of verification is covered under the verification charge and has to be borne by the loan applicant.
- Goods & Services Tax: The applicant has to bear a small fee in the form of Goods and Services Tax (GST) for any additional service required by them during the loan sanction or repayment.
- Fees for duplicate statements: A lender might also charge a fee for generating a duplicate statement of the repayment schedule and outstanding balance of the loan. Generally, this fee ranges between Rs. 200 and Rs. 500 and varies from bank to bank.
Personal Loan Interest Rates
Personal Loan Interest Rates offered by banks and other financial institutions are mainly decided by the borrower’s credit score, monthly income, age, employment status, and location. You can easily compare the latest interest rates of various private and public sector banks, non-banking financial companies (NBFCs), Small Finance Banks, and Micro Finance Institutions online on MyMoneyMantra. At present, personal loan interest rates vary between 9.30% and 24% per annum.
FAQs
Lenders bear some costs related to administration at the time of processing a personal loan. To cover this cost they charge a processing fee. The processing charges for personal loans may include a fixed percentage of the sanctioned loan amount, documentation charges, verification charges, and applicable GST and other taxes.
Here are the processing charges of some top lenders:
- Axis Bank's loan processing fee is at the discretion of the bank.
- Processing fee for personal loan in SBI can go up to 1.50% of the loan amount (minimum Rs. 1,000 and maximum Rs. 15,000) plus applicable GST.
- ICICI Bank's loan processing fee is up to 2.50% plus GST.
- HDFC bank personal loan processing fee is up to Rs. 4,999.
- Bajaj Finance processing fee for personal loans is up to 3.93% of the loan amount.
There are some ways to get zero processing fee personal loans. Some banks offer personal loans without processing fees for specific customer segments (such as defense personnel, pensioners, government employees, women, etc.). You can also avail of instant online loans without processing fees or ask your bank for no processing fee personal loan offers. You can also look out for seasonal offers wherein some lenders offer 0 processing fee personal loan schemes.
In most cases, processing charges for personal loans are non-refundable. However, in some cases, lenders may split the total processing fee into two parts, i.e. an upfront login fee and a balance processing fee which is payable at the time of sanction or disbursement. The upfront fee is non-refundable in such cases whereas the balance processing fee is paid on;y after the loan amount is sanctioned. To get the most benefits of the loan you can apply for a personal loan without a processing fee.
Foreclosure charges are applied by the loan providers when the borrower wishes to foreclose or prepay the remaining loan balance in full before the repayment tenure ends. These charges usually vary from 2% to 6.5% of the amount prepaid plus applicable GST.
When the loan EMI bounces, the borrower has to pay an EMI bounce penalty which is usually 2% per month of the bounced payment.
At present, you can get without processing fee personal loans from Canara Bank. The bank is running festival offer, under which you can get instant loan without processing fee.