The Rate of interest alone should not be evaluated before completing your loan application. There are other hidden charges involved in personal loan as well. Personal Loan also comprises other costs charged by the banks or any other financial institutions which affect the overall cost of the loan and should be considered while evaluating it across different banks. Following are the details of the charges involved in personal loan:
- Processing fee: Processing Fee is charged by banks from the borrowers to process their loan application. It normally ranges from 1% to 2% of the total loan amount. Many times there are offers with zero processing fees. You must find them out.
- Pre-payment fee: Pre-payment Fee is charged by banks from borrowers when they pay the loan EMIs before the tenure which normally is between 2% to 5% of the unpaid loan amount. Some financial institutions give the provision of zero charges for the pre-payment of the loan amount.
- Late penalties: Whenever there is a delay in paying the monthly EMIs of your loan, banks charge a late payment fee along with your EMI. This normally ranges from 2% to 3% of the EMI.
- Cheque bounce charges: Banks may charge Rs. 250 to Rs. 500 for every bounced cheque given for the payment of the loan amount due to insufficient funds in your loan account.
- Documentation charges: These are the charges involved in personal loan included for verifying the documents for processing the loan application and may vary from Rs.500 to Rs.1000.
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