Personal loans are a popular way to borrow money for various expenses such as home renovation, medical bills, or even a vacation. However, before availing a personal loan, there are several charges that you need to be aware. This article will discuss the various charges you need to pay before availing of a personal loan.
Loan Application Fees
The lender charges this fee for processing the loan application. The fee can vary depending on the lender and the loan amount. For example, SBI personal loan charges a processing fee of up to 1.50% of the loan amount. It is important to note that this fee is non-referential, meaning that even if the loan application is not approved, the fee will not be refunded.
Many lenders charge a fee if the loan is prepaid before the end of the loan tenure. This fee is usually a percentage of the outstanding loan amount. For instance, SBI personal loan charges a prepayment fee of 2% on the outstanding principal amount if the loan is prepaid before the end of the loan tenure.
Foreclosure charges are similar to prepayment charges when the loan is closed before the end of the loan tenure. The charges vary depending on the lender and can be a percentage of the outstanding loan amount or a flat fee. For instance, SBI personal loan charges a foreclosure fee of 2% on the outstanding principal amount if the loan is closed before the end of the loan tenure.
Late Payment Charges
If the loan EMI is not paid on time, the lender may charge a late payment fee. This fee can vary depending on the lender and can be a percentage of the EMI or a flat fee. For example, SBI personal loan charges a late payment fee of 2% per month on the overdue amount.
Some personal loans may require collateral such as a property or vehicle. The lender may charge a fee for evaluating the collateral and registering it in their name. This fee can vary depending on the lender and the type of collateral.
It’s important to consider these charges when availing a personal loan. Make sure to carefully read and understand the terms and conditions of the loan before signing the agreement. Compare different loan options and choose the best suits your needs and budget.
It’s also important to note that some lenders may offer additional services such as loan or credit life insurance, which can provide financial protection in case of unexpected events such as death, disability or job loss. However, these services may come with additional charges. It’s important to consider whether these services are necessary for you and if the additional charges are worth it.
Additionally, it’s also important to consider the loan’s interest rate, as it can significantly impact the overall cost of the loan. Compare the interest rates of different lenders to ensure you are getting the best deal.
Availing a personal loan is a big financial decision, and it is important to be aware of all the charges that come with it. Always compare different loan options from different lenders, such as SBI personal loan, and choose the one that best suits your needs and budget.
It’s also important to understand the terms and conditions of the loan and the charges before signing the agreement. This will help you make an informed decision and avoid any financial difficulties in the future.