Processing Fee
An upfront fee charged by lenders to cover loan application and administrative costs.
Apply for a LoanWhat is Processing Fee?
A processing fee is a one-time upfront charge levied by lenders to cover the cost of evaluating your loan application, running credit checks, legal and technical verifications, and administrative processing. It is typically a percentage of the loan amount (0.5–3%) plus 18% GST, deducted from the disbursed amount. The processing fee is non-refundable in most cases, even if the loan is not approved — verify this before paying.
Example
₹20 Lakh home loan with 1% processing fee = ₹20,000 + ₹3,600 GST = ₹23,600 total. You receive ₹19,76,400 (₹20L minus ₹23,600). For personal loan: 2% on ₹5 Lakh = ₹10,000 + ₹1,800 GST. Always factor processing fee into your total loan cost.
Frequently Asked Questions
Is the processing fee refundable if the loan is rejected?
Processing fees are generally non-refundable — even if the loan is rejected after credit assessment. Some lenders refund the fee if they reject the application within the first 3–7 days (before full processing begins). Always ask about the refund policy before paying. If you withdraw the application yourself after paying, the fee is usually forfeited. This is why applying through Biddaro makes sense — we assess eligibility before you apply, reducing the risk of fee loss on a rejection.
Can the processing fee be negotiated?
Yes — processing fees are negotiable, especially for larger loan amounts, strong credit profiles (CIBIL 750+), or existing banking relationships. Common ways to get fee waivers: negotiate directly with the bank branch manager, apply during promotional periods (festive season — Diwali, Navratri — when banks offer zero processing fee campaigns), use a loan marketplace like Biddaro that negotiates fees in bulk with partner lenders.
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