You may be charged the processing fee even if your loan is rejected. Check out the reason

If you have applied for a loan during this pandemic outbreak and your loan request has been rejected by the bank, then you might still be charged the processing fee. To know in details, the processing fee is charged by the lender for the cost incurred in processing the loan. It includes the technical fee and handling charges.

There are no rules on how much a lender can charge a processing fee from you. Many lenders have set their own processing fee according to their cost. And it may be different for every customer who visits them for borrowing the loan.

On this, CEO of Myloancare, Gaurav Gupta said- “Generally, banks charge a higher percentage of processing fee for a smaller loan amount while tend to give a discount in case the loan amount is higher. In most cases, processing fees once paid are non-refundable. Some lenders follow a policy of encashing processing fee cheque only on sanction. In many cases, lenders split the total processing fees into two parts—a login fee that is payable upfront and a balance processing fee payable at the time of sanction or disbursement.”

“Typically, public sector banks charge processing fee after the loan is sanctioned while private sector banks charge upfront,” he added.

You must go through the terms and conditions and ask the lender to be transparent with the policies and the charges of the same. There shouldn’t be any hidden charges. And to make sure, you must check the charges before applying for the loan.