Why Your ₹10,000 Loan Might Cost You ₹15,000 – Hidden Charges Explained

💸 “I only borrowed ₹10,000. How do I owe ₹15,000 already?”

My Real Story: The Shocking ₹5,000 I Didn’t See Coming

I remember taking a ₹10,000 loan through a popular app when my laptop suddenly crashed during a freelance project. The process was smooth, the money came instantly. But three months later, I realized I had paid nearly ₹15,000 in total. Where did the extra ₹5,000 come from?

That experience opened my eyes to the many hidden charges lenders don’t talk about. Here’s what you should know before borrowing—especially in 2025 when even “RBI-registered” apps often slip in surprise costs.

🔎 1. Processing Fee + GST

This is the first trap. Apps deduct 1% to 5% as a processing fee before disbursing the loan. Then they slap 18% GST on top.

For a 2% fee on ₹10,000 = ₹200
Add 18% GST = ₹36
So you only receive ₹764 in hand

Apps rarely highlight this clearly, and users like me discover it only after the money arrives.

⏱️ 2. Late Payment Penalty

If you’re late even by a day, apps charge:

2% to 4% of EMI as penalty
Or a flat ₹450 to ₹900 per missed due date

In my case, I delayed the 2nd EMI by 4 days and got hit with a ₹550 fee.

✉️ 3. Foreclosure Charges

Want to repay early? Think again. Many apps charge 2% to 4% of the remaining principal as a “foreclosure fee.”

You’re punished for being responsible. And yes, there’s GST on that too!

💰 4. EMI Bounce Fees

If your account has insufficient funds or UPI fails:

Expect ₹500–₹1500 bounce fee
This can happen even if it’s not your fault (e.g., app glitch, UPI delay)

📝 5. Duplicate NOC / Rescheduling / Admin Charges

These include:

₹200–500 for duplicate No Objection Certificates
₹300+ to change EMI date
Upto ₹1,000 for loan rescheduling

They may sound small, but they pile up quickly.

💼 Example: True Cost of ₹10,000 Loan Over 3 Months

Description	Amount (INR)
Processing Fee (2%)	200
GST on Processing (18%)	36
Late Fee (once)	550
Bounce Fee (once)	500
Prepayment Penalty	200
GST on Prepayment (18%)	36
Total Extra Cost	1,522
Effective Repayment	₹11,522+ interest

✅ How to Avoid These Hidden Charges

Ask about all fees before accepting
Avoid late payments: use auto-debit with buffer funds
Avoid prepayments unless penalty-free
Use apps with clear T&C, like Fibe, KreditBee, MoneyTap
Read reviews on harassment or extra fees

🚨 Red Flags to Watch For

“No-cost loans” that don’t mention GST
Loans with very short repayment cycles (7-15 days)
Apps asking for full access to contacts/photos
Poor Google Play reviews mentioning fraud or harassment

🔗 Related Reads

📊 Final Word: Read the Fine Print or Pay the Price

Loan apps make it easy to borrow—but sometimes costly to repay. Don’t be fooled by low interest rates alone. It’s the hidden charges that turn a ₹10,000 loan into a ₹15,000 burden.

I learned the hard way. You don’t have to.

Check out: Best Loan Apps for Low-Income Earners

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