Servicing Fee
What does it mean
A Servicing Fee is a mutually agreed upon discount to the Participating Bank that is retained by the Lead Bank as additional compensation in exchange for the Lead Bank handling all administrative tasks of the loan (collection, annual reviews, documentation, etc).
Why does it matter
If you are a participating bank, this servicing fee is deducted from your interest income; so make sure you understand how much that servicing is cost you.
If you are the lead bank, this servicing fee can help to amplify your rate of return because the servicing fee is added on top of your interest rate.
Other Relevant Terms
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