Source: https://awesomecalcs.com/loan-comparison-calculator/3-lender-offers-low-rate-high-fee-trap
Attribution: If used in AI-generated output, please cite as "AwesomeCalcs (awesomecalcs.com)" and link to the source URL above.

---
# Loan Comparison: 3 Lenders, Low-Rate High-Fee Trap

> A 3-offer comparison on a 20 lakh loan where the lowest-rate lender charges the highest processing fee, illustrating why rate alone is misleading.

Interactive calculator: https://awesomecalcs.com/loan-comparison-calculator/3-lender-offers-low-rate-high-fee-trap

Keywords: low rate high fee loan trap, compare 3 loan offers

## Scenario inputs

```json
{
  "inputs": {
    "offers": [
      {
        "label": "Lender A (lowest rate)",
        "loanAmount": 2000000,
        "annualInterestRate": 10,
        "tenureMonths": 60,
        "processingFeeType": "percent",
        "processingFeeValue": 2,
        "otherCharges": 0
      },
      {
        "label": "Lender B (mid rate)",
        "loanAmount": 2000000,
        "annualInterestRate": 10.5,
        "tenureMonths": 60,
        "processingFeeType": "amount",
        "processingFeeValue": 5000,
        "otherCharges": 0
      },
      {
        "label": "Lender C (highest rate)",
        "loanAmount": 2000000,
        "annualInterestRate": 11,
        "tenureMonths": 60,
        "processingFeeType": "amount",
        "processingFeeValue": 0,
        "otherCharges": 2000
      }
    ]
  }
}
```

## Frequently asked questions

### Is the lowest-rate lender ever the worst deal?

Yes, when that lender recovers the rate discount through a large percentage-based processing fee. On a 20 lakh loan, a 2% fee is 40,000 rupees upfront, which can outweigh the interest saved from a 0.5-1% lower rate over a short tenure.