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How does the processing fee impact the interest rate of a loan or credit product?

Curious about Processing Fee

How does the processing fee impact the interest rate of a loan or credit product?

The processing fee is a separate charge from the interest rate on a loan or credit product. While the interest rate is the cost of borrowing the principal amount, the processing fee is charged for the administrative and other expenses incurred by the lender in processing and disbursing the loan.

However, the processing fee can indirectly affect the overall cost of the loan or credit product. For example, if you are comparing two loan options with the same interest rate, but one has a higher processing fee, the one with the higher processing fee will be more expensive overall.

It is important to compare the processing fees charged by different lenders and factor them into the overall cost of the loan or credit product when deciding which option to choose.

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