Loan charges and penalties
Fees and penalties: when they are charged and how they are calculated.
A loan charge is a fee or penalty added to a loan. Create charges here, then attach them to loan products (or add them to an individual loan).
When the charge applies (charge type)
| Charge type | When it is charged | Example |
|---|---|---|
| Disbursement | At disbursement, deducted or collected upfront | Processing fee |
| Disbursement — paid with repayment | Raised at disbursement, collected with the instalments | Fee spread over the loan |
| Specified due date | On a date you choose | Valuation or legal fee |
| Instalment fees | On every instalment | Ledger or insurance fee per instalment |
| Overdue instalment fee | When an instalment becomes overdue | Late payment penalty |
| Overdue on loan maturity | When the loan is still unpaid after its final date | Maturity penalty |
| Loan rescheduling fee | When the loan is rescheduled | Restructuring fee |
| Last instalment fee | On the final instalment | Closure fee |
How the amount is calculated (charge option)
| Charge option | Calculation |
|---|---|
| Flat | A fixed amount |
| Original loan principal | Percentage of the amount disbursed |
| Percentage of original loan principal per instalment | Percentage of principal, charged each instalment |
| Principal due on instalment | Percentage of the principal due that instalment |
| Principal + interest due on instalment | Percentage of the full instalment |
| Interest due on instalment | Percentage of the interest due that instalment |
| Total outstanding loan principal | Percentage of the principal still owed |
Important
Penalties count toward the effective interest rate in many markets and may be capped by law. Check your regulator’s limits before setting overdue charges.
Charges can be waived on an individual loan — see Charges, interest and waivers.
Something unclear or out of date? Tell us and we'll fix it.