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  • Why all finance companies takes various types of processing fees and internal rates.

    Have a query about various types of loan and the processing fees charged? Looking out for answers to the type of processing fees charged by various finance companies? Here, on this Ask Expert page you can go through the advice provided by experts.

    I want know that why the financial companies do not refund the charges of processing of loan. There are many financial companies in India, government and private sectors. They distribute various types of loan such as Education loan, Personal loan, Home loan, Property loan, Self Employed loan, Salaries loan etc. The companies counsellor are serving with the directions of the companies or Banks with their best experience but there are sometimes differences with the companies and the counsellor services.
    In that fact the loan holders are suffering badly while the loan is approved. Because the loan holders always submit their processing fees as counsellor advises.
    While the loan is approved the procedures seem to change and the customers are not capable to submit as per the terms and ultimately the loan is cancelled.
    But India is a very poor country and people's earning is very low. In this condition a poor family looses the money. Because the Financial companies and Bank refund the amount of processing loan.
    I am already suffering very badly because my family income is very low. So, I request to all the Financial companies and Banks kindly do not collection their fees before disbursement of the loan or any other changes of loan.
  • Answers

    4 Answers found.
  • The author is absolutely right on his facts but due to some reasons we don't have to be personal on either ways & at the same time we must indulge ourselves in some different perspective onto this wherein nothing in this world comes on free of cost but on its contrary we are staying in a very professional & competitive environment wherein we are liable to pay for almost on anything.

    What the author has referred to are belonging to the service industries & like other business areas these also are moved by some predetermined terms & conditions and as these service charges forms the major part of their revenues there are hardly any possibilities that these are going to be stopped. During various times we have seen banks either introducing with the new charges or hike the existing ones sharply & that even some of these charges are being re-introduced after having been suspended during a certain period of time like that of Demonetization phase with a sizeable increase.

    One another fact that may demoralize the customer onto this account is that the RBI does not regulate service charges of banks but instead it has instructed banks to keep charges within reasonable limits & be transparent.

    The miserable part is that this doesn't get limited to the current issue but instead have been extended to the other areas as well wherein if not followed with the terms & conditions than deductions may incur. These areas could be the Minimum balance to be maintained for the saving & current account & for other charges like the pay for SMS alerts, debit and credit card, online transactions— NEFT, RTGS, IMPS—issuing extra cheque leaves, issuing a demand draft, besides levying penalties in case of a bounced cheque or insufficient funds in the case of an ECS mandate etc.

    The appreciate the author for raising with the valid query but would be regrettable for those institutions.

  • Whenever a bank or a financial institution processes a loan then if it is approved the institution will get it repayed by the person who has taken loan and during repayment certain interest will be charged. The interest earned on the loan amount is the income of the institution. These loan interest rates are generally fixed by the apex department in the Govt like RBI in India. The Govt tries to keep these rates minimal depending upon the inflation and other financial indicators.

    The financial institutions add some processing charges or fees to it as the interest amount is not sufficient for them to make the loan disbursement a viable proposition. So this charge is also be paid by the person who has taken loan. If the loan is not approved still the time of the institution and manpower hours are lost in that process and they want the charges and some financial compensation against it.

    So the only solution is that they should charge the processing fee only when the loan is approved. Govt has to change the existing regulation in this matter. Till that time the helpless loan seeker has to abide by the current regulations.

    Knowledge is power.

  • Banks and financial companies earn their revenue through various services. Loan is one of them. The recovery of loan along with the interest is a very crucial factor for the profitability of the banks. All the banks charge a fee or service charge also for these services.

    So, every transaction will earn some fee for the bank. This fee is generally taken before the service. That is the reason that banks charge it beforehand.

    As per procedure and regulations this fee is levied on the customer.

    Thoughts exchanged is knowledge gained.

  • Respectively all experts,.Thanksgiving to all of you.I like to inform you that I have already submit my documents for supporting to my loan application and also submit to both companies processing fees Rs.6500.00 the companies are Firstly Shree Ram Finance Limited web: sheer am Email: and Second company is Ultimate Finance Company web: Email: Email:
    I have accepted the terms and condition both of the companies. I have contact with them by phone, the first company advisor or staff was told me only processing fees is require for disbursing loan 10 Lakh, but after submit the processing fees the company was sending me approve letter and add there Security and Stamp Duty charge Rs. 22500.00. I have already consulting with the company about the charges they said that by phones no need any other charges after approved the the loan.
    And the Second company was said to me by phone no need extra or any other charges to disbursement the loan and direct deposit the loan Rs.3 Lakh to my bank account as their terms. The advisor/staff was promised me and said that 100% guaranty no charges are require for disbursing loan. The Ultimate Finance Company wants 3 Months Pre EMI Rs. 24,489.00 is must be submit for disbursement the loan 3Lakh.
    Now I want to know that how can I submit the Rupees to both of the companies also what kinds of their terms and conditions. We are well known that the EMI can be less from the loan amounts. Because I have already a company apps are called KreditBee is less their EMI or processing fees before the loan is transfer to bank account. Also RBI was setting their terms and conditions for all companies or banks same as all types of loan holder or their customers.

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