Personal Loan Processing fee and Charges

31 Oct 2022

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Loans are backbones that offer a financial equilibrium. As India prepares to enter the festival season, it's time to amp your finances. Spendings are on an upward spiral from September to December for almost all families across the nation. Indian festivals are elaborate and expensive, but if you have your financial goals sorted, getting a loan should not be a problem. While saving for the festival every month is a great idea, it may not be sufficient. So some manage their festival season’s financial overheads with loans quite effectively. Learn more about the nuances of personal loan processing fees and personal loan process steps (PLPS). This complete insight will make loan procurement a more informed exercise.

What Is a Processing Fee for Personal Loan?

If you are a rookie availing of loans, even a bit of knowledge can make your loaning experience easy. No service in this world is free, so personal loans without processing fees do not exist. Loans come at a cost, other than the interest paid on them. A personal loan processing fee is a charge levied on loans for a reason. It is a percentage amount charged by the lender from the borrower on the loan to cover the administrative cost for the application of the personal loan process. The processing fee may differ depending on the institute disbursing the loan. On special occasions, banks and NBFCs waiver the processing fee for increased availability, however, if you choose to loan from PSU Banks, the processing fee is considerably reduced compared to private banks.

How Are Processing Fees Charged?

Let's look at a situation where you are purchasing a home on loan. The personal loan process steps will involve an equated monthly instalment (EMI) which will include various charges that come with the loan along with the principal amount for the home loan. Some lenders group charges while others treat them separately. These can be fixed amounts, or a percentage is charged on the loan amount as the personal loan processing fee.

Fees And Charges on Your Personal Loan

Just as you are about to compare the best option for availing of your loan, here is a comprehensive idea of what the processing fee for personal loans entails.

Application fee

The application fee is charged by the lender at the outset as an initial fee for the evaluation of the loan application. Below is the evaluation of the personal loan process steps:

  • If the application is furnished with relevant documents
  • If the information in the document is accurate for the next step
  • Cost recovery of the manpower assigned for the task

The fee can be charged flat by the lender as a personal loan processing fee or a variable fee on the personal loan process. 

Technical fee

This personal loan processing fee is levied on the borrower by the lender as an assessment fee for inspection and assessment of market value.

Legal fee

For any personal loan, the lender needs to establish if the loan seeker is involved in any legal dispute. For this, a legal expert is hired to scrutinize documents. This legal fee is deducted from the personal loan processing fee.

Statutory loan charges

The lender collects statutory charges from the borrower on behalf of a regulatory body such as the government like the GST charges.


Once the loan is disbursed, the procurement process can be delayed. However, the lender will start charging a simple interest known as pre-EMI till the loan amount is realised.

Loan Re-appraisal fee

In some cases, borrowers may not take the loan after its sanction and disbursal. If the period stretches for a long time, the loan application is re-evaluated.

Notary fee

This fee is charged from NRIs for additional paperwork as part of the loan processing fee. For documentation notary by the Indian embassy or the local notary of residence. If the individual is a Power of Attorney holder for an NRI, a notarised adjudication in India will be applied which comes at a fee.


Personal loans are the smartest choices when you require extra cash for a special purpose that outstretches your salary. Instead of asking friends and family for financial help, loans provide solvency that helps you beat the cash crunch and gracefully return the money to your debtor through consistent regularity. However, one must not overlook the personal loan processing fee while calculating their loan amount for healthy planning.

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