Personal Loan Processing Fee

Personal loan is one of the best means to help you meet any immediate financial needs, such as wedding, home renovation or repair, debt consolidation, vacation, medical expenses, and so on. However, apart from interest rate a personal loan comes with a processing fee, which is often non-refundable. A personal loan involves various other fees and charges in addition to interest rate and processing fee which should be kept in mind before applying for the loan. Read on to know about personal loan processing fee and all other fees and charges associated with a personal loan to ascertain the affordability and overall cost of the loan.

Fees and Charges of Top Banks 

BanksProcessing FeePrepayment ChargesLate Payment Charges
HDFC Bank Personal LoanHDFC personal loan processing fee is up to 2.50%2% to 4% 2% p.m 
IDFC First Personal LoanUp to 3.5% 5% 2% p.m
Bajaj Finserv Personal LoanBajaj Finance personal loan processing fee is up to 4%2% to 4% + applicable taxes2% to 4% p.m
Kotak Mahindra Bank Personal LoanUp to 2.5% + GST2% to 4% + GST3% p.m
ICICI Bank Personal LoanProcessing fee for personal loan in ICICI is up to 2.50% + GSTUp to 5% + GST24% p.a
Yes Bank Personal LoanYes Bank personal loan processing fee is up to 2.50% 2% to 4%24% p.a
Tata Capital Personal LoanUp to 2.75% + GST4.5% to 6.5% + GST3% + GST
SBI Personal LoanSBI personal loan processing fee is up to 1.50% + GST3%2% p.m

What are the Different Charges of Personal Loan?

Following are the different fees and charges related to personal loan which are common to most lenders:

  • Processing fees: Lenders bear some cost related to administration at the time of processing a personal loan. To cover this cost they charge a processing fee that usually varies between 0.5% and 2.50% of the loan amount sanctioned. The processing fee for personal loan varies from bank to bank. The applicant can either pay the processing fee straight away or get it deducted from the sanctioned loan amount at the time of its disbursement.
  • Part prepayment or foreclosure charges: Part prepayment means paying off a part of your outstanding loan amount whereas foreclosure means paying off the entire outstanding loan amount in one go before the tenure ends. Paying off the debt before tenure ends can cause the lender to incur a loss. To cover the loss, the bank often charges a penalty for the prepayment (part and full), known as prepayment charges. This penalty usually varies between 2% to 4% of the amount prepaid and varies from bank to bank.
  • Penalty on late EMI payment or defaults: When borrowers opt for a personal loan, they are required to repay the loan amount through EMIs (equated monthly instalments). Borrowers have to make sure that they pay the EMIs on time. Defaulting or delaying the EMI payment attracts a penalty ranging from 2% to 3% per month on the missed/delayed EMI amount.
  • Verification charges: Lenders have to be assured about the timely loan repayment capacity of the applicant before they actually sanction the loan. For this purpose, they carry verification of the borrower. They usually hire a third party agency for verifying the credentials of borrowers. These agents are responsible to check the credit score and credit repayment pattern of the applicant. This extra cost of verification is covered under the verification charge and has to be borne by the loan applicant.
  • Goods & Services Tax: The applicant has to bear a small fee in the form of Goods and Services Tax (GST) for any additional service required by them during the loan sanction or repayment.
  • Fees for duplicate statement: A lender might also charge a fee for generating a duplicate statement of the repayment schedule and outstanding balance of the loan. Generally this fee ranges between Rs. 200 and Rs. 500 and varies from bank to bank.

Personal Loan Interest Rates

Personal Loan Interest Rates offered by banks and other financial institutions are mainly decided by the borrower’s credit score, monthly income, age, employment status, and location. You can easily compare the latest interest rates of various private and public sector banks, non-banking financial companies (NBFCs), Small Finance Banks, and Micro Finance Institutions online on MyMoneyMantra. At present, personal loan interest rates vary between 8.45% and 24% per annum.

Kotak Personal Loan Festival Offer 

Ahead of festival season, Kotak Mahindra Bank has announced Rs 999 flat processing fee offer on Personal Loans. Customers can avail of instant approvals on personal loan applications up to Rs. 20 Lakhs at lowest interest rate starting at 10.25% p.a for maximum of 5 years. 

View and improve your credit score - for free.

Know how good your score is

Get insights on how to improve it

Unlock offers as per your score

chart_15f235bf64 (1).svg

personal loan processing fee FAQs

What is included in the loan processing fee?

Lenders bear some cost related to administration at the time of processing a personal loan. To cover this cost they charge a processing fee. The processing charges for personal loan may include a fixed percentage of the sanctioned loan amount, documentation charges, verification charges, and applicable GST and other taxes. 

Here are processing charges of some top lenders:

  • Axis Bank personal loan processing fee ranges between 1.5% to 2% of the loan amount plus GST.
  • Processing fee for personal loan in SBI can go up to 1.50% of the loan amount plus applicable GST. Processing fee for personal loan SBI is completely waived off from 15th August 2021 till 31st January 2022 under Festive Offer. 
  • ICICI Bank personal loan processing fee is up to 2.50% plus GST.
  • HDFC bank personal loan processing fee is up to 2.50%.
  • Bajaj Finance processing fee for personal loan is up to 4% of the loan amount.

How can I get a personal loan with no processing fee?

There are some personal loan options that may involve no processing fee personal loan, such as personal loan for specific customer segments (such as defence personnel, pensioners, government employees, women, etc.), instant personal loan without processing fee, etc. You can also look out for seasonal offers wherein some lenders offer zero processing fee personal loan schemes. Also, some lenders offer online personal loan without processing fee.

Are personal loan processing fees refundable?

In most cases, personal loan processing charges are non-refundable. However, in some cases, lenders may split the total processing fee into two parts, i.e. an upfront login fee and a balance processing fee which is payable at the time of sanction or disbursement. The upfront fee is non-refundable in such cases whereas balance processing fee is paid on;y after the loan amount is sanctioned. To get the most benefits of the loan you can apply for personal loan without processing fee.

What are the foreclosure charges for personal loan?

Foreclosure charges are applied by the loan providers when the borrower wishes to foreclose or prepay the remaining loan balance in full before the repayment tenure ends. These charges usually vary from 2% to 4% of the amount prepaid plus applicable GST.

What happens when EMI bounces?

When the loan EMI bounces, the borrower has to pay an EMI bounce penalty which is usually 2% per month of the bounced payment.