How to calculate the processing fee for a personal loan?

When considering a personal loan, it is essential to understand the various fees involved in the borrowing process. One of these fees is the processing fee, which is charged by lenders for the administrative tasks associated with assessing and disbursing the loan.

Together, we will delve into the reasons behind levying processing fees on personal loans and discuss when these fees are payable. We also inform you how loan processing fees are calculated with a step-by-step guide.

Why are processing fees levied on personal loans?

Processing fees are an integral part of personal loans and serve a crucial purpose for both lenders and borrowers. Lenders, such as Finnable, incur costs for processing loan applications, verifying documents, conducting credit checks, and disbursing funds. To cover these administrative expenses, lenders charge borrowers a processing fee. This fee helps ensure the smooth functioning of the loan approval and disbursal process, enabling lenders to provide efficient and reliable services to borrowers.

When to pay the processing fees?

Loan processing fees are typically payable upfront, either before or at the time of loan disbursement. The specific timing may vary between lenders, which is why it is essential to carefully review the terms and conditions provided by your chosen lender, such as Finnable.

In most cases, the processing fee is deducted from the loan amount when it is disbursed to the borrower. However, some lenders may require the fee to be paid separately in advance. Moreover, processing fees are one-time charges and not reoccurring over the course of the loan tenure.

How Loan Processing Fees Are Calculated

Calculating processing fees for a personal loan involves a straightforward process. Here’s how to calculate the processing fees on your personal loan:

Step 1: Loan Amount Determination

The first step is to determine the loan amount you wish to borrow. For instance, let us suppose that you decide to borrow ₹1,00,000 from Finnable.

Step 2: Check the Processing Fee Percentage

Review the terms and conditions provided by Finnable to find the processing fee percentage. The processing fee currently imposed by Finnable is 4% of the loan amount. Accordingly, the calculation would be as follows: 

Processing Fee = Loan Amount x Processing Fee Percentage 

Processing Fee = ₹1,00,000x 0.04 

Processing Fee = ₹2,500

Step 3: Consider Additional Charges

Apart from the processing fees, lenders may also charge other associated fees, such as administrative fees or service charges. Therefore, it is essential to factor in these charges when calculating the overall cost of the loan. 

Finnable does not impose any such charges and all of our fees are transparently informed to the borrower.

Step 4: Total Cost Calculation

To determine the total cost of the loan, including the processing fee, add the processing fee obtained in Step 2 to the other applicable charges. This will give you a clear idea of the total expenses associated with the loan.


When applying for a personal loan, it is crucial to carefully review the terms and conditions, including the processing fee structure, to make an informed decision. By understanding how loan processing fees are calculated, you can effectively plan for the payment of the loan.

Understanding how to calculate processing fees on personal loans is essential when considering borrowing options. These fees cover administrative costs incurred by lenders and contribute to the seamless loan approval and disbursal process. By calculating the processing fee and considering additional charges, borrowers can evaluate the overall cost of the loan accurately.

Finnable, a leading personal loan provider in India, offers transparent and reliable services to borrowers. Our dedicated team ensures that the loan processing fees and associated charges are clearly communicated, providing you with a comprehensive understanding of your financial obligations. By choosing Finnable, you can enjoy the benefits of personalised service and competitive rates, making your borrowing experience fully hassle-free.

Frequently Asked Questions (FAQs):

Loan processing fees are typically calculated as a percentage of the loan amount. To calculate the processing fee, multiply the loan amount by the processing fee percentage provided by your lender.  The processing fees imposed by Finnable are 4% of the loan amount.

No, processing fees are not negotiable or waived.

Typically, processing fees are not refundable, regardless of whether the loan application is approved or rejected. These fees are charged to cover the administrative costs incurred by the lender during the loan evaluation process.

In addition to processing fees, personal loans may come with other associated fees, such as administrative fees, service charges, or prepayment penalties. It is important to carefully review the loan agreement and terms and conditions to identify all applicable fees and charges.

Processing fees are typically deducted from the loan amount at the time of disbursal. This means that you will receive the loan amount minus the processing fee. 

Amit Arora


I am a seasoned retail banker with over 21 years of global experience across business, risk and digital. In my last assignment as Global Head Digital Capabilities, I drove the largest change initiative in the bank to deliver the end-to-end digital program with over US$1 billion in planned investment. Prior to that, as COO for Group Retail Products & Digital, I implemented a risk management framework for retail banking across the group.
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