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You’ve just been approved for a personal loan — sounds great, right?
But then, the deductions begin. Suddenly your ₹1,00,000 loan becomes ₹95,500 in hand. What happened?
Let’s talk about the hidden costs of personal loans that most borrowers in India never see coming — and how Vizzve Finance helps you stay ahead of them.
🧾 1. Processing Fee (1% – 3%)
🧠 What it is:
A fee deducted before the money hits your bank account.
📌 Example: ₹1,00,000 loan – ₹2,000 processing fee = ₹98,000 disbursed.
🛡️ Vizzve Tip: Always ask for the “net disbursal amount” before signing.
🔁 2. Prepayment & Foreclosure Charges
🧠 What it is:
Want to pay off early? Many banks penalize this with 2%–5% on the remaining principal.
📌 Why it matters: You’re punished for being financially disciplined.
🛡️ Vizzve Tip: Choose lenders (like Vizzve partners) offering zero foreclosure charges after 6–12 months.
⏰ 3. Late Payment Penalties
🧠 What it is:
Miss an EMI? You may be charged ₹500–₹1,000 per missed payment, plus 2%–3% monthly penalty interest.
📌 Bonus damage: It hurts your CIBIL score too.
🛡️ Vizzve Tip: Set EMI auto-debit in the Vizzve app and activate payment reminders.
📉 4. GST on Loan Charges
🧠 What it is:
All fees (processing, foreclosure, documentation) are taxable at 18% GST — often buried in fine print.
📌 Example: ₹2,000 processing fee → ₹2,360 after GST.
🛡️ Vizzve Tip: Always calculate the "GST-included total fee" before applying.
🧾 5. Documentation & Legal Charges
🧠 What it is:
Some NBFCs/banks add ₹500–₹1,500 as file charges, agreement stamps, or mandate registration.
📌 Hidden in welcome kit or final page of the sanction letter.
🛡️ Vizzve Tip: At Vizzve, we show you the total cost (no hidden charges) before you proceed.
🔄 6. Loan Insurance Charges (Optional, But Pushed)
🧠 What it is:
Banks often “recommend” personal loan insurance — but sometimes bundle it without asking.
📌 Cost: ₹3,000–₹5,000 added to your loan principal or deducted upfront.
🛡️ Vizzve Tip: Say NO to bundled loan insurance unless it’s explained clearly.
🧮 Real Loan Example with Hidden Charges
| Loan Amount | ₹1,00,000 |
|---|---|
| Processing Fee | ₹2,000 + ₹360 (GST) = ₹2,360 |
| Insurance Added | ₹4,000 |
| Net Amount Credited | ₹93,640 |
| EMI Delay Fine (if late once) | ₹750 + ₹400 (interest) = ₹1,150 |
➡️ So your ₹1L loan effectively gives you only ₹93.6K, and it could cost more if you're not careful.
💬 FAQs
1. What’s a “No Cost” Loan?
A myth. There’s always a cost — but Vizzve transparently lists them all upfront.
2. Are hidden fees legal?
Yes, if disclosed. That’s why reading the loan agreement is critical.
3. Can I negotiate the processing fee?
Yes! With Vizzve’s lender partners, low or zero processing offers are often available.
✅ Final Thoughts: Know Before You Owe
Hidden costs make personal loans look cheap, but feel expensive.
With Vizzve Finance, there are no surprises, just smart financing.
🚫 No hidden fees
✅ Transparent terms
📲 App-based tracking
💡 Personalized offers
📲 Apply Smarter with Vizzve
Before you say yes to a personal loan, ask:
👉 What’s the real cost after charges?
👉 Are there cheaper lender options?
🎯 With Vizzve, the answers are just a tap away.
Published on : 17th July
Published by : SMITA
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RBI-Registered Loan Partner | 10 Lakh+ Customers | ₹600 Cr+ Disbursed.