Last updated 12 Nov 2026
A personal loan costs more than its interest rate. Lenders add a processing fee, taxes and sometimes charges for late payment, part-payment or closing early, so compare offers on the total you will pay, not the headline rate.
Every charge on this page is set by the lender. The lender must show them to you in writing before you accept the loan, in a document called the Key Fact Statement. This guide explains each charge so you can read that document with confidence.
The charges at a glance
Common personal loan charges and when they apply
| Charge | What it is | When it applies | Where to find it |
|---|---|---|---|
| Interest | The price of borrowing, charged on the outstanding balance | Every month through the EMI | Key Fact Statement and loan agreement |
| Processing fee | A one-time fee for evaluating and setting up the loan | Usually deducted from the amount paid out | Key Fact Statement, sanction letter |
| Documentation or admin charge | Cost of preparing the agreement and records | Once, at sanction or disbursal | Schedule of charges |
| Taxes on fees | GST on the fees the lender charges | With each fee it applies to | Key Fact Statement |
| Penal charges | A charge for a late or missed payment | Only if you pay late | Loan agreement, Key Fact Statement |
| Bounce charge | A flat charge when a payment instruction fails | Each time a payment fails | Schedule of charges |
| Part-payment or foreclosure charge | A charge on paying early, where the rules allow one | When you pay a lump sum or close the loan | Key Fact Statement |
| Copy charges | Cost of a repayment schedule, statement or closure letter copy | When you ask for it | Schedule of charges |
Interest is the biggest cost, but not the only one
The interest rate decides most of what you repay. See current rates on the interest rates page and read how a reducing-balance rate differs from a flat rate. A flat rate placed next to a reducing-balance rate looks lower but costs far more over the same loan.
The fees below sit on top of interest. A small difference in fees can matter as much as a small difference in rate, especially on a short loan.
Processing fee
The processing fee pays for the lender's work: checking your papers, assessing your credit and setting up the account. It is normally taken once, when the loan is sanctioned or paid out, and many lenders deduct it from the amount you receive. A loan of ₹5,00,000 may then reach your account as less than ₹5,00,000, even though you repay interest on the full amount.
Ask three things. Is the fee a fixed amount or a share of the loan? Is it deducted from the payout or collected separately? Is any part refunded if the loan is cancelled in the cooling-off window? Each lender answers differently, and the answer is in your Key Fact Statement.
Taxes on charges
GST is charged on many of the fees a lender takes. Interest on a loan is generally not charged GST, but fees often are. When you compare offers, compare fees after tax. Read the GST on loan charges entry, and check the rate shown in your own documents instead of assuming one.
Penal charges for late payment
If an EMI is not paid on its due date, the lender can apply a penal charge. RBI's fair-practice approach for regulated lenders is that this is a stated charge for the late payment, not an addition to your interest rate, and it should not be compounded on itself. Lenders must state it in the agreement and the Key Fact Statement. Read penal charges and then see what happens if you miss an EMI, because late payment also affects your credit score.
A worked example shows why this matters. Suppose your EMI is ₹18,000 and a payment fails because of a low balance. You may face a penal charge for the delay, a bounce charge for the failed instruction, tax on both, and a record of late payment with the credit bureau. The money cost can be small, but the credit record can last for years.
Bounce charges and payment instructions
Most personal loans are repaid through an electronic mandate or post-dated instructions. If the instruction fails, the lender may charge a flat amount for each failure. Keep enough balance in the repayment account a day before the due date. If you change bank accounts, ask the lender how to change the mandate before the old account closes.
Part-payment and foreclosure charges
You may want to pay a lump sum or close the loan early. Whether a charge applies depends on the type of loan and on who you are. In general, RBI rules bar regulated lenders from charging prepayment penalties on floating-rate loans taken by individuals for non-business purposes, while fixed-rate personal loans can carry a charge that is set by the lender and shown up front. Rules differ for business borrowers. Confirm the position for your own loan, in writing, before you pay.
Read the full guide on prepaying or closing a loan early and the glossary entries for foreclosure and part-payment. To see how much a lump sum saves, use the prepayment calculator.
Other charges to watch for
- A fee to change the repayment date or the repayment account, charged by some lenders
- A charge for a repayment schedule or interest certificate copy
- A fee to convert from one loan option to another, for example from a fixed to a floating rate
- Insurance premiums offered with the loan, which are optional unless the lender says otherwise in writing
- Charges for closure documents, which you should ask about before closing
Insurance deserves care. A lender or agent may present loan-protection insurance as part of the offer. Ask whether it is optional, who the insurer is and what the premium adds to the cost. If the premium is added to the loan amount, you pay interest on it as well.
How to compare two offers on total cost
Do not compare only the interest rate. Put the offers side by side on four lines: the amount you receive in your account, the monthly EMI, the total you will repay over the tenure, and the annual percentage rate (APR). The APR folds the fees into one yearly figure, so a lender with a lower rate and a heavy fee can still cost more.
Worked comparison with round, illustrative figures
| Item | Offer A | Offer B |
|---|---|---|
| Loan amount sanctioned | ₹5,00,000 | ₹5,00,000 |
| Processing fee and tax | ₹10,000 | ₹25,000 |
| Amount you receive | ₹4,90,000 | ₹4,75,000 |
| EMI | ₹16,000 | ₹15,800 |
| Tenure | 36 months | 36 months |
| Total repaid (EMI times tenure) | ₹5,76,000 | ₹5,68,800 |
| Total cost above what you received | ₹86,000 | ₹93,800 |
Offer B has the smaller EMI, but after the fee you receive less and pay more overall. These are round numbers for illustration, not real offers. Use the EMI calculator and the rate comparison calculator with the figures you are actually offered.
How to read the Key Fact Statement
The Key Fact Statement is a short summary the lender must give you before the loan is taken. Under RBI's digital lending rules it shows the loan amount, tenure, APR, the EMI, the one-time and recurring charges and the penal charges. Read it for these lines and ask the lender to explain any you do not understand. See Key Fact Statement and APR for a line-by-line reading.
You also have a cooling-off period under the digital lending rules, set by each lender, during which you can exit the loan by repaying the principal and the interest for the days used. The length and terms are in your document. Read cooling-off period.
Questions to ask before you sign
- What is the processing fee, is it deducted from the payout and is it taxed?
- What exact amount will be credited to my account?
- What is the penal charge for a late EMI, and is it in the agreement?
- Is there a charge for part-payment or closing early on this specific loan?
- Is any insurance or add-on optional, and what does it cost?
- What is the APR, and does it include all charges?
Applying through LOANZ 360
LOANZ 360 is a loan aggregator, not a lender. It compares your details with each partner lender's published eligibility criteria so you apply where you are likely to qualify. This helps avoid unnecessary credit enquiries; too many lender checks in a short time can lower your score. The lender decides, prices and pays out the loan, so every charge above is set by the lender. Before you accept, ask the lender for the Key Fact Statement and compare offers on the APR. Start with the eligibility check or read the salaried personal loan page.
Frequently asked questions
Is the processing fee refundable if I cancel the loan?
It depends on the lender and the stage at which you cancel. Many lenders treat the fee as non-refundable once the loan is sanctioned. Ask in writing what happens to the fee if you use the cooling-off exit or decline the loan before payout, and keep the reply with your loan papers.
Do I pay interest on the processing fee that is deducted from my loan?
If the fee is deducted from the payout, you receive less than the sanctioned amount but still repay interest on the full sanctioned amount. That raises the real cost, which is why the APR is a better comparison than the rate alone.
Can a lender add charges that are not in the agreement?
A regulated lender should charge only what is stated in the Key Fact Statement and the agreement. If you see a charge that was not disclosed, ask the lender for the clause that allows it, then use the lender's grievance process and the RBI Integrated Ombudsman if it is not resolved.
Is there a charge for closing a personal loan early?
It varies. RBI rules generally bar such charges on floating-rate loans to individuals for non-business use, while fixed-rate loans may carry a stated charge. Check your Key Fact Statement and ask the lender to confirm in writing before you close.
Is GST charged on the EMI?
GST is generally charged on fees, not on the interest part of the EMI. Check the tax lines in your own documents, because the treatment of each charge is for the lender to state.
What if my loan was paid out with a charge I did not agree to?
Write to the lender, quoting the charge and the document where you were told about it. If the lender does not respond within the time it states, go to its nodal officer, then to the RBI Integrated Ombudsman.
Related reading: Salaried personal loan, Personal loans, Key Fact Statement and APR, Prepaying or closing a loan early, What happens if you miss an EMI, What decides your personal loan interest rate, Processing fee, Penal charges, EMI calculator.
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