Personal Loans: Fees and Charges
Over the years, personal loans have helped lots of people realise their financial goals. With the huge number of options that are available, you can easily finance anything without burning a hole in your pocket. However, as a borrower, you may incur certain charges and fees over the course of your loan repayment. Some of these fees are compulsory. Most of the others, however, are entirely dependent on you. It all boils down to your repayment discipline. You wouldn’t need to worry if you diligently repay the monthly instalments on time.
Following is a list of fees and charges that you must keep in mind when you avail a personal loan:
1) Processing fee
When you apply for a personal loan from Tata Capital, you are charged a processing fee (if you apply online, however, there is zero processing fee). This is to cover the expenses borne by the underwriting department of the company for processing your loan. The amount is deducted from your loan and it is non-refundable. However, the processing fee is not a fixed amount. It varies for borrowers depending on the loan structure.
2) Part pre-payment charges
If you repay your loan before the due date, it is known as pre-payment. Most lenders include pre-payment in the loan structure to discourage borrowers from repaying loans in advance. For Tata Capital, part pre-payment charges are not levied if you pay back your loan 180 days after taking it. But if you wish to repay before this period, you can only pay up to 25% of the outstanding principal amount. However, if you wish to pay anything more, you will be risking a 2% pre-payment charge.
3) Delay in payment charges
Similarly, it may not be in your best interest to delay your monthly payments too. If you happen to do so, the lender levies an additional charge for every outstanding month. For Tata Capital, this value is a 2% charge over prevailing interest amount.
4) Foreclosure charges
If a borrower suddenly stops making the monthly payments, the lender may decide to levy additional charges along with the rest of the loan amount. These charges are known as foreclosure charges. The amount to be paid can vary between different lenders. In the case of Tata Capital personal loans, it is 4.5% of the outstanding principal amount at the time of foreclosure. In the case of foreclosure charges on top-ups, it is 2% on the future principal outstanding on the existing loan.
5) Miscellaneous charges
Apart from these, there are other miscellaneous charges you can incur over the course of your loan. These include charges for Post Dated Cheques (PDC) and check bounces. In case you give post-dated cheques to the company, you will be charged Rs 850. And if you have insufficient funds in your account and your cheque bounces, you will have to pay Rs 450 under bouncing charges.
The bottom line
The best way to deal with fees and charges is to be aware of them. Knowledge, in this case, can be your asset. This also safeguards you from being asked to pay extra money in the name of official fees.
