What are Loan Service Charges? In Canada, the loan officer is the person to go to for all your banking needs when looking to borrow from a bank. He is the point of contact, one who gives you documentation details, does the verification with regard to your capacity to repay the loan, and does the processing. In effect he decides from the bank's perspective whether you can be lent the amount or not.

For this verification and processing there is normally a charge attached, called the loan service charges. Some industry experts fell that when and how you make this payment affects the fate of your loan application. Though in theory the loan officer is an employee of the bank, in most cases, practically they are from an outside agency and so their fee assumes significance.

It is the responsibility of the loan officer to verify the data, work out a deal, process the necessary documents and file the loan application with the bank. Get it processed and close the deal. For all this and resultant paper work they handle, their remuneration is the loan service charges, which can be anywhere from 1 - 4% incase of an experienced loan officer who has a client with bad credit history. If the loan officer works from home or uses the banks facilities or the mortgages broker's to meet his clients and close the deal, he may pocket between 70-80% of his 1% commission.

It all depends on his ability to sell himself and his capacity to close the deal to the mutual satisfaction of his clients and the bankers. In case of payday loans, which can act as a stop gap measure till your next paycheck, the loan service charges tend to be much higher than any other kind of loan. So one should always keep this as a last resort, to be availed of only under unavoidable circumstances. But payday cash loans, however helpful they are, should be the absolute last resort and not taken lightly as their interest rates and service charges are astronomical.

The federal government tries to keep a check on the interests and service charges for these loans, but it is an uphill task, as people don't quibble about the high loan service charges when they are desperate for funds. Due to the global economic meltdown, banks everywhere are feeling the pinch. In an effort to offset their own misguided investments, banks have decreased the interest payable on deposits, while simultaneously increasing the interest and service charges on loans and borrowings.

Now consumer protection groups are urging the FCAC - Financial Consumer Agency of Canada, to study and limit the earnings of banks through their credit cards, small business loans and mortgages. Perhaps the day is not far off when the online loans are available in Canada too. it is already available in the UK and the US. Loans are auctioned off, eBay style, at the lowest interest charges. Anyone can lend or borrow. You just need to log in, provide some basic details and start either posting your bid for a loan or offering a loan at a certain interest rate. Then we will have a level playing field, financially and reasonable loan service charges. What are Loan Service Charges?

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