Car loan fees and charges: Banks levy service fees and charges on car loans such as processing fee, foreclosure fee, prepayment fee, stamp duty charges, late payment fee, etc. Processing fee is a small percentage of the principal amount that is deducted from the loan amount at the time of loan disbursal. Prepayment charge is a small percentage of the prepayment amount wherein the percentage varies depending on the time period during the loan tenure at which the loan is partly or wholly prepaid. Late payment charges are imposed on borrowers who fail to make EMI payments on the due date. The penalty fee for a late payment is a small percentage of the outstanding due of the loan amount. Foreclosure charge is a small percentage of the outstanding loan amount that a borrower decides to fully prepay before the end of the loan tenure.