Personal loans are a popular choice for covering unexpected expenses, consolidating debt, or funding big purchases. With the ease of a personal loan online apply process and the convenience of a personal loan app, borrowing money has never been simpler. However, many borrowers focus only on the interest rate and overlook the hidden costs that can add up quickly. Understanding these costs can save you money and help you make a smart borrowing decision.

1. Processing Fees

When you apply for a personal loan, lenders often charge a processing fee to cover administrative costs. This fee is usually a percentage of the loan amount and is deducted before the loan is disbursed. For instance, if you’re approved for a Rs 10,00,000 loan with a 2% processing fee, you’ll only receive Rs 9,80,000. Make sure to check the exact fee when comparing loans, as it can vary from one lender to another.