A personal loan is one of the most versatile options available in the market. It is also popular among people. Several lenders offer them to customers to upgrade their lifestyle. Higher disposable incomes have meant people opt for this loan to meet different expenses.
The biggest reason it is in demand is because it is unsecured which means no collateral. Lenders do not put up any conditions for the usage of funds, which means they can be used for any purpose. It is for this reason that personal loan interest rate can get high sometimes.
Associated charges:
Lenders have different fees apart from personal loan interest. It is important to understand them before you apply for a personal loan. These charges are over and above the personal loan interest.
Here are the fees and charges associated with personal loan:
- Personal loan Interest rate: Ranges usually between 9.5 per cent to 24 per cent per annum
- Loan processing fees: It is up to 0 per cent to 2 per cent of the approved loan amount
- Pre-closure fee: Almost 0 per cent to 5 per cent of the unpaid or outstanding principal loan amount
- Interest on late payment: Could be 2 per cent monthly or per delayed EMI or 24 per cent annually
- Part pre-payment charges: They are generally 2 per cent of the principal outstanding. Some lenders charge 3 per cent depending on the number of installments paid out. Some lenders do not charge any pre-payment fees after a certain number of installments like no fees after 36 instalments. This protects their interest income to a certain extent.
- Amortization schedule charges: 200 to Rs. 250 + GST as applicable per schedule
- Foreclosure or pre-payment statement charge: Rs. 100 to Rs. 250 + GST as applicable
- Loan cancellation charges: Some lenders charge between around 2 to 3 per cent of the loan amount, while others charge fixed charges, which can range from Rs. 3,000 to Rs. 7,000. A few lenders charge interim interest from the time of loan disbursement to the time the loan is cancelled.
- Stamp duty & other statutory charges: Changes differ from state to state
- Cheque swapping charges: Rs. 500 to Rs. 750 + GST as applicable
- Cheque bounce charges: Rs. 200 to Rs. 500 + GST as applicable per cheque that bounces
- Repayment mode swap charges: 500 + GST as applicable
- Duplicate Interest Certificate Issuance Charges: 200 to Rs. 250 + GST as applicable per interest certificate
- Post dated cheque charges:
- Account statement charges: Rs. 50 to Rs. 200 + GST as applicable
- EMI bounce charge: Rs. 400 to Rs. 450 + GST as applicable
- Duplicate statement charges: Rs. 200 to Rs. 250 + GST as applicable
These charges change from lender to lender. It is possible to get a few charges reduced or eliminated. This will depend on your relationship with the bank, your credit score, and your repayment capacity. In fact, if you have a good repayment ability and a higher credit score, you can even negotiate with the lender to reduce your personal loan interest rate which can lead to significant savings.
- ArjitChalmela's blog
- Log in or register to post comments