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finance charge - This is the one time fees that the bank may charge for processing your loan

Interest rate - This is the rate at which you must pay the bank interest for availing the loan during the loan tenure.

Ex: Assuming you take a Rs. 1 lakh loan for 1 year at 10% fixed rate of interest and a 0.5% processing fee/finance charges

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Monthly payment = 9166.67/- (Out of this Rs. 8333.33 would be principal repayment & Rs. 833.33 would be interest)

Finance charges = Rs. 500/-

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