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What are the costs that come with getting a loan?

Getting a bank loan is a necessary part of anyone's financial journey. A loan can help in getting access to meet current needs, whether it's for an investment or a lifestyle upgrade. But securing a loan also comes with necessary fees. Here are a few fees that you need to take into consideration when applying for a loan.

 

Processing Fee

Much like any product or service, banks and lending institutions charge a fixed fee to make up for the costs of processing your loan application. This fee goes to credit checks and other administrative procedures they have to undertake before approving a loan application. 

 

Usually, banks deduct P1,500 to P2,500 from the loan amount. Meanwhile, processing fees in other lending companies and government mandated credit institutions vary. 

 

TIP: Consider the processing fee when deciding on how much money you want to borrow in order to assure that you have enough funds for your financial needs. 

 

Disbursement fee

 

As its name implies, a disbursement fee is the payment amount charged to borrowers each time they take out a part of their loan amount. This type of fee is more common in personal loans and may vary from one lender to another. 

 

TIP: Cash out your entire loan amount at once in order to avoid getting charged with disbursement fees multiple times.

 

Monthly add-on interest

 

The monthly add-on interest is a percentage of a loan that borrowers need to pay to the lenders. It’s added on top of the principal amount borrowed and is the charge that you pay to banks and credit facilities for the privilege of borrowing their money. This amount varies depending on the lender, the amount borrowed, annual interest, and loan tenure.

 

Lenders need to charge interest in order to compensate for the risks they take by letting people borrow money from them. More often than not, interest is charged monthly so that it’s easier and it won’t be too big of a burden for the borrower.

TIP: You can calculate your possible monthly installment due and interest. Just follow this computation: 

 

{(P x I x N) : P)} n , where

P = Approved amount

I = Interest rate per annum

N = Tenure of facility in years

N = Tenure of facility in months

 

Late payment fee

Remember that every action has a consequence and this includes neglecting to pay your loan on time. Thus, if you miss any payments, you will be charged by your lender with a late payment fee. This fee could range from 3% - 8% of your overdue amount or P300 - P500 whichever is higher. 

 

TIP: Avoid late payment fees by setting up automatic payments to your loan on or before your actual due date.

 

Early settlement fee

There’s nothing more fulfilling than paying off a debt ahead of time. However, this may also come with additional charges. Banks may charge you with an early settlement fee when you pay your loan in full. This is to make up for the interest they would have collected if you paid off your loan until its maturity. Usually, it’s 4-8% of your current outstanding balance. 

 

This fee may also be called early payment fee, installment acceleration fee, closure handling fee, prepayment fee, or pre-termination fee.

TIP: Choose banks or lenders that don’t charge extra for paying off your loan before it matures. 



With CIMB Bank’s Personal Loan, you have fewer things to worry about when it comes to fees. Enjoy ZERO disbursement fees when you opt to have your loan deposited to your CIMB Bank account. Absolutely no early settlement fees. Apply for a Personal Loan with just 1 ID and 1 Payslip.

 

PLUS you can get up to 30% interest rebates on your Personal Loan just by paying your dues consistently and on time. Through the Loan Loyalty program, you can enjoy yearly increasing interest rebates starting with 10% for the first  year and up to 30% by the fifth year. All you need to do is pay your monthly loan payments completely and on time! If you’re a CIMB deposit account holder, just apply and get approved for a Personal Loan on or before August 31, 2020 to become eligible. Take a step toward your goals!

 

Learn how you can apply for a Personal Loan using the CIMB Bank PH App:

 

 

Visit the link below to know more about our Loan Loyalty Program: 

 

 

Download the app to apply for our Personal Loan today!