Unsecured Personal Loans are the most common funding options to cover urgent financial needs. They are easy to obtain due to their digital loan procedures and simple eligibility conditions. You may use them for different expenses. However, understanding the processing fee helps manage the finances better. You can make an informed decision without any surprises later.
The following sections will discuss the Personal Loan processing fee.
What is the Personal Loan Processing Fee?
Lending institutions levy a processing fee for processing your loan application. It covers the administrative costs the loan provider incurs during the verification and approval process. These include credit assessment, document verification, and other administrative tasks.
A loan processing fee is typically a percentage of the loan amount you borrow. You must pay the fee at the time of disbursal. At Hero FinCorp, this fee ranges from 2.5% to 3.5% of the loan amount, plus taxes. Depending on the lender’s policy, you must pay the fee separately or have it deducted from your approval loan amount. You will receive the net loan amount after deducting the processing fees.
Also Read: 15 Top Instant Personal Loan Apps in India
Is it Mandatory to Pay the Processing Fee?
While processing fees are common on Personal Loans, some lenders may offer a waiver under special offers or conditions. You must compare and inquire with different loan companies to find such options. However, consider several other factors before finalising the deal. These include the interest rates, loan amounts, and repayment terms.
How to Calculate the Processing Fee?
The processing fee is typically a percentage of the loan amount you borrow. The percentage varies between loan companies. At Hero FinCorp, it ranges from 2.5% to 3.5% of the loan amount, plus taxes. For instance, if you borrow a loan amount of Rs 5 Lakh and the processing fee is 2.5%, your processing fee would be Rs 12,500 plus applicable taxes.
Processing Fee: Refundable or Not?
Lenders charge the processing fee for the administrative tasks they perform to approve your loan application. It is a one-time fee with no refund. Review the loan company’s terms and conditions to understand their refund policy.
Also Read: All You Need to Know About Digital Personal Loans in India
Factors Impacting the Processing Fees
Factors impacting the processing fee vary between loan companies. The percentage of the loan amount the lender charges as a processing fee may vary. Here are some key factors affecting the Personal Loan processing charges:
- Lender's Policy: Each finance provider has a fixed processing fee policy. They charge a range of processing fees for Personal Loans. For instance, Hero FinCorp charges a processing fee of 2.5 to 3.5%. Compare different loan plans based on your requirements. Some lending institutions may waive the fee due to promotional offers. However, check other charges and conditions to ensure the benefit.
- Credit Rating: The credit score is a crucial factor lenders consider when evaluating your default risk. A higher credit score indicates that you have managed credit in the past responsibly. It allows you can get a Personal Loan at a lower processing fee.
- Loan Amount: The amount you are seeking for the loan has a direct relation with the processing fee. The higher the loan amount, the higher will be the processing fee as it is a percentage of the loan amount.
Now that you understand the processing fee, you can efficiently plan your finances. When applying for a Personal Loan, it can significantly influence your total loan cost. Carefully compare the loan offers and review the agreement before finalising a loan plan.
Disclaimer: The information provided in this blog post is intended for informational purposes only. The content is based on research and opinions available at the time of writing. While we strive to ensure accuracy, we do not claim to be exhaustive or definitive. Readers are advised to independently verify any details mentioned here, such as specifications, features, and availability, before making any decisions. Hero FinCorp does not take responsibility for any discrepancies, inaccuracies, or changes that may occur after the publication of this blog. The choice to rely on the information presented herein is at the reader's discretion, and we recommend consulting official sources and experts for the most up-to-date and accurate information about the featured products.
