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Before getting a personal loan, it is vital for you to know the charges that come with it. Read on to know what they are.
Personal loans can help fund many requirements. From marriage to an emergency, you can utilise a personal loan to cover any expense. However, to get the best out of your loan, ensure you know everything about it. You can start by analysing the charges and processing fees of the personal loans offered by various institutions.
Read on to understand the various types of personal loan charges and to explore FIRSTmoney, IDFC FIRST Bank’s smart personal loan that offers unique benefits such as zero foreclosure and low processing fees.
Types of personal loan charges
There are varied types of personal loan charges that you should be aware of to manage your loan smartly. Here is a list of these charges:
1. Interest rate
Personal loans have a higher interest than home loans because they are a form of unsecured loans. The personal loan interest rate from IDFC FIRST Bank’s FIRSTmoney starts at just 9.99%. The interest rate applicable to an individual's interest rate is determined by his age, credit rating, job, creditworthiness, and other factors.
2. Processing charges
The processing fees for a personal loan is a one-time charge, used to cover the bank's operational costs, and the personal loan approval time it dedicates to your loan. The processing charges normally range from 0.5-5% of the loan amount. The processing fee is deducted upfront and added to the overall loan cost. Most banks charge a non-refundable processing cost, which means even if you cancel the loan after it has been approved, the fee will not be refunded. With IDFC FIRST Bank’s FIRSTmoney, you pay a low processing fee of just 2% of the principal loan amount.
3. Goods and Services Tax (GST)
An 18% GST is applied to loan-related services, such as prepayment and part-payment fees, processing fees, cancellation fees, duplicate statement issuing fees, and so on. However, note that GST does not apply to interest costs.
4. Foreclosure fees
Personal loans usually offer the flexibility to close your borrowings by making early repayments, however, may have to pay a charge against loan closure. The foreclosure charges can vary between 3% to 5% of the outstanding loan amount. Several banks have a six to 12-month lock-in term. It implies you cannot close your personal loan before the term is over.
IDFC FIRST Bank’s FIRSTmoney personal loan has no such terms. It has zero foreclosure charges, which means that you can foreclose your loan anytime without any incurring any penalty charges.
IDFC FIRST Bank does not charge any foreclosure fee for FIRSTmoney loans, helping you close your loan without any financial burden.
5. EMI bounce fees
You will be charged an EMI bounce fee if you miss an EMI payment. In case you are unable to pay your EMI on or before the due date in a month, banks charge this EMI bounce fee. IDFC FIRST Bank’s FIRSTmoney charges a 7.5% fee of the EMI amount or the outstanding amount (minimum ₹400 and maximum ₹1,000), in case of an EMI default.
6. Loan cancellation penalty
If you change your mind and want to cancel your personal loan after it has been approved, the bank may impose a loan cancellation fee. A bank may impose either a fixed cancellation fee plus 18% GST or the corresponding interest payment from the time the loan was issued to the time it was terminated. However, with IDFC FIRST Bank, you get a cooling off period of 3 days within which you can cancel your loan without any penalties.
7. Charges for switching repayment modes
Customers have the liberty to switch their personal loan repayment mode, although they may have to make an additional payment. When you change your repayment mode in the middle of your loan term, lenders may charge a payment swap charge. A FIRSTmoney personal loan comes with a nominal payment swap fee of ₹500 plus 18% GST.
8. Charges for duplicate paperwork
Some banks charge ₹50 to ₹500 plus 18% GST to reprint loan-related paperwork, such as indices, statements, No Objection Certificates (NOCs), and amortisation. A minor fee may be charged for this service.
9. Other fees
Legal and stamp duty are a few other types of fees you may have to pay for availing a personal loan. They may differ from one lender to the next.
Conclusion
FIRSTmoney’s unique benefits such as zero foreclosure charges, flexible repayment tenures ranging from 9 to 60 months, competitive interest rates, and a completely digital application process make IDFC FIRST Bank a smart choice for any instant personal loan requirements. With FIRSTmoney’s transparent loan terms, you can seamlessly manage your loan without any hassles!
Disclaimer
The contents of this article/infographic/picture/video are meant solely for information purposes. The contents are generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. The information is subject to updation, completion, revision, verification and amendment and the same may change materially. The information is not intended for distribution or use by any person in any jurisdiction where such distribution or use would be contrary to law or regulation or would subject IDFC FIRST Bank or its affiliates to any licensing or registration requirements. IDFC FIRST Bank shall not be responsible for any direct/indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information mentioned. Please consult your financial advisor before making any financial decision.