Personal loan is given by banks without many documents, on which the bank charges interest according to the amount. Personal loans are easily available to the people, easily without much process. But do you know that there are many types of charges levied on personal loan as well? If you are also planning to take a personal loan, then you must know what are the charges levied on the personal loan?
processing charge on loan
While processing and approving your loan, the bank has to pay certain administrative expenses. This is usually a negligible amount, which varies from bank to bank and ranges between 0.5% and 2.50 percent of the total loan amount. The minimum and maximum percentage of loan processing fee is determined by each bank.
verification charge
Before sanctioning a loan, a bank has to determine that you have the ability to repay the loan. To do this, they pay a third party organization to verify your credentials. They look at your credit history and loan payment history. The cost incurred is recovered from the borrower. This expense is treated as a verification fee.
Penalty for EMI default
Banks allow you to pay off a reasonable amount of the loan through equated monthly installments or EMIs. If you miss EMI, you may have to pay a penalty. So instead of trying to repay the loan quickly, choose an EMI amount that you can repay easily.
duplicate statement fee
If you need duplicate details of your repayment schedule or if you ever lose track of the total loan amount outstanding, you can approach your bank for the same. You can get these details from your bank by paying a nominal fee.
GST
If the customer requires any additional services during the loan sanction or repayment period, he will also have to pay a small fee in the form of GST tax.
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Prepayment or foreclosure penalty
If you pay off your loan before the agreed-upon period, your bank may suffer as you have already paid off the loan. Your bank may impose a prepayment penalty as compensation for this loss. A bank often levies a prepayment/foreclosure fee of 2-4 per cent.