Understanding the personal loan processing fee
The processing fee is simply a one-time, non-refundable charge levied by lending institutions while approving and distributing personal loans. This fee generally ranges from 0.5% to 4% of the total loan amount. It depends on several factors, such as the lending institution, the borrower’s credit profile, credit score, and promotional waivers. Furthermore, an 18% GST is added to the fee, which can further increase the borrower’s total outlay.
Why do lenders impose processing fees?
Lending institutions impose processing fees for several reasons and functions:
Note: The interest rates and charges discussed above are illustrative. For exact fees, updated interest rates, reach out to the official website of the respective lending institution.
Factors influencing the processing fee
The amount of the processing fee can vary based on:
Important considerations for borrowers to keep in mind
Before applying for a personal loan, borrowers are advised to:
- Check the processing fee details in the loan offer and agreement.
- Check offers from multiple lenders and resolve doubts with the customer support team.
- Keep in mind that fees and hidden charges can impact the overall cost of borrowing.
- Look for lender promotions or offers that may waive or reduce the fee.
- Note, processing fees are generally strictly non-refundable, even if the loan is cancelled.
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