A survey by the Bank of Ghana has shown that for the last quarter of 2019, a retail loan could attract as much as 7.75 percent in fees in addition to the interest to be paid on the loan.
A retail loan is given to an individual by a commercial bank, a credit union, or a financial institution to purchase assets like property, vehicles, consumer electronics, etc.
According to the Central bank, commercial banks charge five different fees on loans given to their retail customers.
The survey looked at all fees and charges imposed by banks on their various products and services.
It covered all twenty-three banks currently in operation in the country.
Per the survey, between October and December 2019, commercial banks charged five different fees including; arrangement fee, which is an administration charge made by lenders for arranging credit; processing fee which is charged to cover the costs incurred by the lender on the loan process, as well as insurance fee which is applied, and the insurance premium added to the loan amount and paid back over the life of the loan.
An analysis by Citi Business News shows that the highest fee of 7.75% was charged by Ecobank. It is followed by First National Bank-GHL Bank which has a lending fee of 5.25% on retail loans. Also, Stanbic bank charged 5.1% in lending fees on retail loans as at the end of December 2019.
Meanwhile, Cal Bank, Republic Bank and Bank of Africa had lending fees of 3% each while Access bank, Fidelity Bank and Barclays bank had fees ranging between 1.5 to 6.75%, 3.75 to 5.86% and 3.65 to 4.35% respectively.
United Bank for Africa charges as low as no fee to 2% on retail loans with Zenith Bank and Standard Chartered bank charging 2% – 3.5% and 2% – 2.5% respectively.
A bank may charge all of the five or at least one of the fees.
However, Consolidated Bank did not provide any information on whether or not it charges lending fees for its loans as the survey showed non-availability of data.