The Real Cost of a Personal Loan Isn’t Just the EMI
Most borrowers evaluate personal loans based only on:
- EMI affordability
- Interest rate
- Tenure options
But the true cost of a personal loan includes multiple hidden or lesser-known charges that many banks or NBFCs may not disclose upfront to you or maybe hide them in the fine print.
1. Foreclosure or Prepayment Charges
What it is: A penalty for repaying your personal loan before completing the agreed upon tenure
Typical range: 2%–5% of the outstanding principal.
Why it matters: If for any reason you decide to close your loan early (after receiving a salary hike or a bonus) this charge can wipe out your expected interest savings.
At IDFC FIRST Bank, we charge zero foreclosure fees on FIRSTmoney Personal Loans — so you can repay anytime without the fear of penalty.
2. Processing Fees
What it is: A one-time fee deducted from your approved loan amount at the time of disbursal. In case you go for an additional loan, you will have to again pay a processing fee on the same.
Typical range: 1%–3% of the loan value.
Example: On a ₹5 lakh personal loan, a 2% fee means you get ₹10,000 less in your bank account. However, it is still included in the principal amount.
💡 Tip: Always check if the processing fee is flat or negotiable. Some lenders may offer lower fees for higher credit scores.
3. Documentation and Admin Charges
What it is: Charges for handling paperwork, verification, or courier costs are often buried under “miscellaneous”.
Why it matters: Even a ₹999 admin charge adds up, especially when it’s not disclosed upfront or appears post-disbursal.
✅ FIRSTmoney personal loans are 100% digital that come with no courier or document handling charges.
4. Late Payment Penalties
What it is: Fees (and sometimes additional interest) for delayed EMI payments.
Typical range: ₹500–₹1000 per EMI + penal interest (2%–3% of the overdue EMI, charged extra per month).
What to watch out for: Lenders who calculate late interest daily, causing the amount to compound really fast.
5. Mandate Rejection / Bounce Charges
What it is: Charges applied if your auto-debit/EMI instruction fails due to low balance or bank error.
Typical Range: ₹300–₹500 per failed attempt.
Pro Tip: Even one bounce can negatively affect your credit score.
✅ IDFC FIRST Bank sends timely reminders to help you stay on track and maintain a clean credit record.