Personal Loan Processing Fees & Other Charges

 

A processing fee is a one-time fee levied by lenders to cover the administrative costs involved in processing and disbursing a personal loan. The fee is usually deducted upfront from the loan amount or added to the total cost of the loan.

Why Do Lenders Charge a Processing Fee

Lenders charge a processing fee to recover costs incurred during the loan application process. This includes document verification, employment and income checks, and other administrative procedures to assess the borrower’s creditworthiness.

How Much Is the Processing Fee on a Personal Loan

Personal loan processing fees usually range between 0.5% to 4% of the loan amount. While some public sector banks may charge lower fees, private banks and NBFCs can charge higher fees based on their internal policies and the applicant’s credit profile.

Is the Processing Fee Refundable

Processing fees are usually non-refundable, even if your loan application is rejected or if you cancel the loan post-approval. However, some lenders may offer promotional waivers or lower processing fees during festive seasons.

Complete List of Personal Loan Fees & Other Charges

Charge Type	Description
Processing Fee	0.5% to 4% of the loan amount; capped by some lenders
Prepayment/Foreclosure Charges	NIL for floating rate loans (as per RBI); fixed rate loans usually range around 2% – 5% on the principal outstanding
Stamp Duty Charges	As per actuals
Loan Cancellation Charges	Usually around Rs 3,000
Loan Statement Charges	Often NIL or up to Rs 500 per statement
Documentation Charges	Around Rs 500
Verification Charges	Around Rs 500-Rs 1,000
GST	Applicable on all processing fees and charges

Charges Related to Late/Missed EMI Payment Charges

Most banks and NBFCs charge late payment fees, bounce charges, etc, on missed personal loan EMI payments by the due date.

Charge Type	Description
Late EMI Payment Penalty	Usually 2% to 3% per month on the overdue EMI amount
EMI Bounce Charges	Up to Rs 450 per instance
Cheque Bouncing or Failed SI Charges	Up to Rs 500 – Rs 750 per instance

Processing Fees on Personal Loan To Pensioners & Defense

The processing fees on personal loan offered to defense and pensioners are usually NIL or lower than those offered to regular salaried or self-employed individuals.

Bank	Processing Fee
SBI Personal Loan to Defense Sector Employees	100% waiver
PNB Personal Loan to Defense Personals	NIL
Central Bank of India Personal Loan to Pensioners	NIL
Bank of India Personal Loan – Star Pensioner Loan Scheme	Senior Citizen (60 years & above)- NIL For others- One time @ 0.50% (Rs 250-Rs 1,000)
Baroda Pensioners Loan	Rs 1,000

Bank/NBFC-wise Personal Loan Processing Fees 2025

Bank	Processing Fee	Loan Amount	Interest Rates (p.a.)
SBI	Up to 1.5% of the loan amount (Min. Rs 1,000; Max. Rs 15,000)	Up to Rs 35 lakh	10.30% – 15.30%
HDFC Bank	Up to Rs 6,500	Up to Rs 40 lakh	10.90% – 24.00%
Punjab National Bank	Up to 1% of the loan amount	Up to Rs 20 lakh	10.50% onwards
Tata Capital	Up to 5.5% of the loan amount (Up to 4% for instant personal loan up to Rs 1 lakh)	Up to Rs 35 lakh	11.99% onwards
ICICI Bank	Up to 2% of the loan amount	Up to Rs 50 lakh	10.80% onwards
Axis Bank	Up to 2% of the loan amount	Up to Rs 10 lakh	10.49% onwards
Kotak Mahindra Bank	Up to 5% of the loan amount	Up to Rs 35 lakh	10.99% – 16.99%
IDFC FIRST Bank	Up to 2% of the loan amount	Up to Rs 10 lakh	9.99% onwards
IndusInd Bank	Up to 3.5% of the loan amount; 2% for Instant Personal Loan	Up to Rs 50 lakh (Up to Rs 5 lakh for instant personal loan)	10.49% onwards

Last updated on 8 July 2025

How much GST do you have to pay on a personal loan

GST at the rate of 18% p.a. is applicable to processing fees, verification and documentation charges, EMI dishonor charges, foreclosure charges, etc. This tax adds an extra cost to your personal loan. However, the principal amount and the interest paid are not subject to GST.

Let’s take an example – You have applied for a personal loan of Rs 5 lakh from HDFC Bank. The bank charges a processing fee of Rs 6,500. The GST on the processing fee would be Rs 1,170 (18% of Rs 6,500). The total processing fee you would have to pay would be Rs 7,670.

How to Calculate the Actual Cost of a Personal Loan?

To accurately understand the true cost of a personal loan, it’s important to consider fees and charges along with the personal loan interest rate. The Annual Percentage Rate (APR) gives a clearer picture of the total borrowing cost by factoring in not only the interest but also additional charges like processing fees and verification costs.

What is APR?

APR (Annual Percentage Rate) is the annualized cost of borrowing, expressed as a percentage. It includes:

• Interest rate
• Processing fee
• Documentation/administrative charges
• Any other fees incurred during loan disbursal

You can use an APR calculator available online. Let’s say you availed a personal loan of Rs 5 lakhs @ 11% p.a. with a 5-year repayment tenure. The processing fee charged is 2% of the loan amount, which amounts to Rs 10,000. Therefore, its APR will be 12.89% and the total borrowing cost of your personal loan will be Rs 1.80 lakh.