There are 2 main costs to borrowers when they take up a loan whether its for personal or business - interest & the fees they incur. The most common is the Processing fee (also known as Admin fee or Origination Fee) in which the lender charges a one-time percentage of the quantum or a fixed value, on top of the interest charged.
Application Fee. This kind of fee can be annoying because you might pay the fee and not even get a loan. However, this is very rare in Singapore, though they may request for a commitment fee.
Commitment fee or some lenders call it cancellation fee, applies where they will incur significant (usually for property loans) costs such as from buying valuation reports and credit reports, accessing your eligibility, to come out with the Letter of Offer and you might decide not to take up the loan.
For Invoice financing, rather than interest and quantum, they usually call it a discount fee and discount limit and it is based on the invoices you wish to pledge/sell to them on a month-to-month basis. A Facility Limit of example $100,000 (think overdraft) means even if you have in the following month, 20 invoices of $10,000 each, the total they can disburse to you at any one point in time is $100,000 across some or all of them depending on the Sub Limit (or Advanced/Finance Percentage), which is usually around 70-90% per invoice and not withstanding any outstanding amount.
Some Factors may not grant and therefore indicate a Facility Limit. It will be a one-time transaction and another invoice even from the same customer the next month, will be subjected to approval again. Vice versa, a Facility Limit does not mean all invoices will be accepted, but simply suggest a faster approval as some of the factors have been predetermined.
For Invoice financing or Overdrafts, some lenders may also charge a one-time fee, or an annual/monthly fee usually called a factoring charge to set up an account to provide you with such facilities.
The Discount Fee (or Discount Rate) (similar to the interest on a loan) is usually based on the amount of money that a Factor advances - For example, 90% of a $1,111 invoice would mean about $1,000 advanced to you and they made $111. if you have a discount fee of 1% per month on $1,000 and you have 60 days to pay, you will have a discount fee of $20 to pay later when your customer has settled the invoice. And again, depending on the lender, they may call it differently, but usually, they mean the same thing. Some Factors may lump their “interest” in/up front and buy the invoice from you at 89% instead of collecting it later.
Other terms you might come across depending also on the loan types and region of the lender is from includes the following. These might be particularly important if you may for example, have problem making a repayment or wish to complete a loan earlier.
Early repayment charges. The fee a lender charges borrowers to recover the loss the lender incurs when a loan is partially or fully repaid earlier than agreed. Some lenders may call it a Prepayment Penalty. But not all lenders see it that way especially for shorter tenured loans
Late Payment Fee. Late payment fees are found on every type of loan, personal or business loan. They are charged whenever you fail to make a payment on time.
Returned Check Fee or insufficient funds fees are charged when you try to make a payment/GIRO on your loan but don’t have the cash in your account to cover the payment.
Payment processing fees may be charged when you insist on paying via a cheque versa digital payment.
Confused? Not to worry, FindTheLoan.com is all about transparency and simplifying the process of finding and comparing a loan. From your dashboard, you can easily see the various fees from our Financing Partners to calculate which is The most suitable Loan for you. Other fees such as termination fee, late payment fee could also be found under its misc details column.