What fees must be paid on a personal loan?

Personal loans can be handy if you need to borrow money to buy something big. But they can sometimes come with extra fees and charges you’ll want to watch out for.  

Key takeaways:

  • personal loan fees can vary depending on the lender
  • always read your loan agreement carefully to make sure you’re aware of all fees before going ahead
  • staying on top of your loan repayments is the best way to avoid extra charges.

What type of fees can be charged on a personal loan agreement?

The type of fees you can be charged on a personal loan can vary a lot depending on your lender and the type of loan agreement you have. You should always double check the terms of your loan agreement, so you’re clear on what fees apply to you. That way, you won't get caught out with any surprise charges.

Types of fees explained

Some of the most common personal loan fees to be aware of are listed below. On top of these, there could be a small admin fee for making changes to your loan agreement. For example, if you want to adjust your payment date or pay off your loan early, there could be a charge for that. 

Arrangement fees

Sometimes called a set-up fee, this is a one-off charge that some lenders may charge for processing your loan application. You can usually expect to pay these upfront, or the cost will be added to your total loan amount. 

Early repayment fees

If you choose to pay off your loan before the end of the agreed term, you might be charged an early settlement or exit fee. These are commonly charged on personal loans and mortgages. You can find out more about them and how they work in our early repayment fees guide.

Late payment fees

If you're short on funds and miss a repayment, a late payment fee could be added to your account. It should say in your loan agreement whether late payment fees apply and how they’re charged – sometimes as soon as the day after a missed payment. If you think you might miss a payment, it’s always a good idea to reach out to your lender ahead of time. They may be able to help prevent you from being charged.

Missed payment interest

In addition to late payment fees, some lenders may also charge extra interest on overdue amounts. This can make missing a payment even more costly. Lenders tend to add these charges to cover the risks of late payments. 

What are the alternatives to taking out a personal loan?

If you need to borrow a large chunk of money for a big purchase, like a new kitchen or some new wheels, a personal loan might be good option. But, they aren't right for everyone.

 

It's important to make sure you can afford your repayments before taking out a loan (or any kind of debt). For smaller purchases or short-term expenses – like holidays – credit cards can be a more flexible option. They often come with perks like interest free periods or rewards programmes you can benefit from.

 

Remember to always pay off your balance in full to avoid extra charges.

Personal Loan Credit cards

Personal loan fees FAQs

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