Personal-loan comparisons often use the sanctioned principal and EMI while ignoring deductions at disbursal. The useful number is net cash received: sanctioned amount minus processing fee, applicable tax on the fee, insurance or other financed/deducted charges, and any other upfront deduction.
Use a net-proceeds worksheet
| Line | Example input |
|---|---|
| Sanctioned amount | ₹5,00,000 |
| Processing fee | Use lender’s live fee |
| Applicable GST/tax on fee | Use current invoice/tax rate |
| Insurance/other deductions | ₹X |
| Net cash received | Sanction − all upfront deductions |
Then compare total contractual repayments with net cash received, not only with the sanction. If two lenders both sanction ₹5 lakh but one credits ₹4.82 lakh and the other ₹4.94 lakh, the same EMI does not represent the same economic cost.
Ask whether the fee is deducted or financed
A deducted fee reduces the money you receive. A financed fee may increase the amount on which you repay interest. Read the KFS/sanction and disbursal statement to see which structure applies.
Do not borrow extra merely to cover the fee without recalculating EMI
If you need exactly ₹5 lakh of usable cash, a ₹5 lakh sanction with upfront deductions may be insufficient. Ask what gross sanction would be required to deliver the needed net amount, then decide whether the resulting debt remains affordable.
Verify every deduction against a document
Keep the KFS, fee schedule, tax invoice where issued, sanction letter and bank-credit entry. Unexplained deductions should be raised with the lender immediately. For regulated digital lending, identify the actual bank/NBFC and use the written KFS rather than a platform’s “instant cash” headline.
Decision rule: compare lenders by net cash received, total repayment and exit cost. The lowest processing-fee percentage is not automatically the cheapest loan if the rate, tenure or other charges are worse.