The loan administration fee is one of the costs of the loan, which is very easy to forget when applying for financial support. This inconspicuous fee is, however, able to increase the cost of liability by up to several hundred USD.
What is the administrative fee? What is the administrative fee charged for? Administrative fee and loan – how does it work? What is the cost of the administrative fee for the loan? Which loan companies charge an administration fee?
Many lenders tempt you with cheap and even free loans. Online loans are very easily available. Often you don’t even have to leave your home to get extra money.
When you suddenly need an injection of cash, you may miss the extra costs associated with the loan. They are written in long contracts, which not everyone is sufficiently familiar with. It’s worth making you realize what such fees are and how to avoid them.
What is the administrative fee?
Until recently, an administrative fee appeared in the agreements with loan companies. What is this? The administration fee is an additional fee that has been charged for a long time by loan companies. They had the right to do so, as no law regulated the method of calculating fees for granting loans by non-bank companies.
It so happened that this fee significantly increased the total cost of the entire loan. Everything changed when the Anti-usury Act came into force, which significantly reduced the number of costs that can be covered by non-bank loans. Thus, since March 11, 2016, most parabanks have completely abandoned such a fee.
Among the current offers, it happens that an administrative fee is added to installment loans. In this case, it often increases the already high costs, resulting from interest, commission and preparation fee.
What is the administrative fee charged for?
An administrative fee may be charged for any activity that is necessary to grant a loan. What does it include most often? Lending companies charge it:
- For preparing the loan agreement,
- for verifying the submitted application,
- for checking the customer in the debtors’ databases,
- for the loan itself.
In fact, the administrative fee is simply the extra cost of the loan, and it can be added to many of the activities that lenders do.
Administrative fee and loan – how does it work?
In practice, the administrative fee depends on how much loan you decide to make. Therefore, it is not possible to say unequivocally what the administrative fee for the loan is. Each company can describe it a little differently. In the case of loans for small amounts, companies tend to give up on it.
It is charged if you decide to go for larger amounts. You can expect it if you apply for funds from several thousand USD. The administration fee may be charged once and added to the first installment. It can also be spread between all installments.
Thus, it increases the total cost of the loan. It is important that this fee is not returned to the customer. So you should pay attention to whether it has been added to the popular free loan for new customers.
What is the cost of the administrative fee for the loan?
It is not possible to clearly determine what the costs of the administrative fee are, because each company can set them free. They usually start with twenty-five USD. However, they can be much more.
So it’s always worth asking if the offer you’re interested in is subject to an additional administrative fee so that you won’t be disappointed with higher loan installments later.
Which loan companies charge an administration fee?
In the case of popular payday loans, an administration fee is rarely charged. Some companies also give it up for other loans. Where can you expect her?
Is such a fee justified? It is difficult to assess it clearly. On the one hand, it can be said that the loan company is already earning enough on interest and commission fees. On the other hand, it is a fee for specific activities. However, negotiating its abolition is not easy.
So it’s much better to look for those offers that have no administrative fee. What if the administrative fee was added to your contract contrary to the provisions of the Anti-usury Act? You can file a complaint and also apply for help from the Good Finance.