Understanding the Interest Rates and Fees for Instant Personal Loans Online

Online Instant Personal Loans have emerged as a reliable solution for meeting urgent financial needs. Be it wedding costs, higher education fees or renovating your home, Personal Loan providers ensure you can get quick funding without any security using their loan app. But before you apply, it is essential to learn the interest rates and fees applicable to make an informed decision.

Understanding Personal Loan Interest Rate

The interest rate on an online instant personal Loan is the percentage of the loan amount a lender charges you for borrowing money. It influences the total cost of the loan and determines how much interest you will pay over the tenure of the loan. The interest rate can be fixed or variable.

Understanding the Types of Interest Rates

Flat Interest Rate

This rate charges interest on the entire loan amount over the agreed loan tenure, providing predictable and stable payments.

Reducing Balance Interest Rate

This rate calculates interest on the remaining principal, leading to fluctuations in payments. While it might adjust to the loan balance, it lacks the consistency of fixed rates, which offer more stability and easier financial planning.

Interest Rate Ranges

Personal Loan interest rates can reach 19% per annum. To get the most favourable rate, it’s essential to maintain a good credit score and fulfil the eligibility criteria.

Associated Charges and Fees

Besides interest rates, a few other fees apply to Personal Loans. Knowing these can help you prepare for the total cost of the loan.

Processing Fee

This is a one-time fee you pay the lender to process your loan application. The fee is typically around 2.5% of the loan amount. While this amount may not seem like much, it can add to your total loan cost.

Foreclosure Charges

If you decide to clear the full amount of the loan before its due date, a fee is charged as foreclosure charges. This fee can usually range up to 5%, plus GST, imposed on the remaining balance on the principal. Prepaying a loan may help you save on the interest cost.

EMI Bounce Charges

If you skip an EMI payment, a bounce charge will be imposed. This charge is usually around Rs. 350 per missed EMI. A miss of this EMI to the cost can also come as a late fee.

Other Charges

• Prepayment Charges: This amount is not for all loans, but a few lenders may charge you a prepayment fee, allowing you to clear the outstanding loan before the term ends. 

• Duplicate Repayment Schedule: In most cases, there is no charge for seeking a duplicate repayment schedule.

• Duplicate NOC (No Objection Certificate): Duplicate of the NOC generally does not require any payment or charges.

Conclusion

Personal Loan apps like Hero FinCorp offer a way to borrow money without collateral. However, it’s crucial to understand the rates and fees involved. Consider factors like your credit history and income and compare lenders to secure favourable terms. Always read the fine print and be aware of all charges or fees before agreeing to any loan.