There is no better alternative than taking out a personal loan to cover specific personal needs. Consumers can get a fixed quantity of money for a specified amount of time at a fixed rate of interest using personal loans. While personal loans appear to be a convenient way to borrow money in need, it’s crucial to keep in mind that they come with more costs than you may expect. Furthermore, there is a potential that the lenders would not disclose such hidden costs to you when you apply for the loan. As a result, it’s critical that you keep a careful check on these personal loan processing fees and be prepared for them ahead of time.
What is the definition of a personal loan?
A personal loan is an unsecured loan obtained from a bank or non-bank financial institution for any personal purpose, such as medical expenses, debt repayment, travel, home improvements, university costs, or wedding expenses. An unsecured loan implies you don’t have to give the bank any collateral or security. The loan repayment can be completed on the bank’s website, through app-based lenders, by applying online, or by visiting the bank’s local branch.
Individuals who qualify for a personal loan include:
- Employees of private limited firms, as well as employees of public sector organizations such as the federal, state, and municipal governments
- Individuals aged 21 to 60 years old
- Individuals having a minimum of two years of work experience, along with at least one year with their current job
- Those with a monthly net income of at least $25,000
The Effect of GST on Personal Loans
A personal loan is your instant friend if you’re short on funds for a home improvement, wedding, vacation, or another pressing financial requirement. Personal loans are a convenient method to borrow funds that you intend to repay later. We aim to clarify the implications of GST on personal loans when the government enacts the Goods and Services Tax, or GST.
Personal loan processing fees
Lenders charge a processing fee for their loans. A potential borrower will be charged this fee for the processing of their loan application. Borrowers are paid a processing fee since personal loans come under this category. On loan processing fees, an 18 percent GST is applied. A personal loan processing fee typically runs from 2% to 3%, with Standard Chartered Bank charging up to 2.25 percent. You may acquire a loan up to Rs 30 lakh with low-interest rates and up to 50% off processing expenses if you apply online.
Charge for advance payment
Prepayment charges for personal loans are another area where the 18 percent GST applies. This fee is only applied during prepayment, or when you pay off your personal loan in full before the term finishes. This fee is calculated as a percentage of the remaining personal loan balance or a number of months’ interest. Personal loan prepayment charges at Standard Chartered are calculated based on the number of personal loans EMIs paid. From July 1, 2017, all taxable supplies are subject to GST at the current rates.
Personal Loan EMI
Even if the cost of a personal loan has increased somewhat, the borrower does not bear the brunt of the cost increase. Thankfully, GST has not applied on the EMI part. Personal loans EMIs are not directly affected by the GST. Because personal EMIs were previously exempt from service tax, they are now exempt from GST. As a consequence, the EMI on a personal loan will not alter as a result of the GST. Do you want to know how much an EMI on a Rs 5 lakh personal loan is? Use our personal loan EMI calculator to figure out how much you’ll have to pay each month.
There is no better way to address unique personal demands than to take out a personal loan. Personal loans allow consumers to borrow a certain amount of money for a set period of time at a fixed rate of interest. A personal loan is an unsecured loan taken out from a bank or non-bank financial institution for any personal reason, such as medical expenditures, debt repayment, travel, house upgrades, education costs, or wedding costs. For their loans, lenders levy a personal loan processing fee. This fee will be charged to a potential borrower for the processing of their loan application.