Processing fee
If you usually take money from private lenders and now you are obsessed with high interest rates charged by the private lenders and From now on you want to take loan from the formal source i.e. bank? Here are few things you need to know.
When you go to the bank for loan they ask for lot of documents, proofs, collaterals…. and they also charge you with processing fee. A processing fee is nothing but “a small amount of money asked by banks in order to maintain documents and records for loan” they are processing and you may feel cheated because a private lender never asked you for that.
It is not like “you walk in with collateral to a bank and walk out with money” it is not that simple. Let me explain few things for you…..
Banks maintains proper records
A bank is a financial organisation and it maintains a proper record of everyone who takes loan and deposits in a bank. When you go to bank for loan they charge you with processing fee. It is charged on borrower of loan to maintain for the cost of documents, appraisals and other things relating to loan processing and to maintain proper record, which is completely absent when you get loan from a private lender.
Note: the processing fee is very minimal and it varies with different banks.
