Conversion Fee
Also known as: Rate Reset Fee, Benchmark Conversion Charge
One-time charge to switch loan benchmark (MCLR to EBLR) or reduce spread to current rates.
Detailed Explanation
Conversion fee is charged by banks to reset your loan terms, such as switching from MCLR to EBLR benchmark or reducing your spread to current market rates. The fee is typically 0.25-0.5% of outstanding principal. Calculate the breakeven period - if the fee pays back within 12-18 months through lower interest, conversion usually makes sense.
Related Calculators
Related Terms
EBLR
External Benchmark Lending Rate - Loan rates linked to an external benchmark like repo or T-bill.
MCLR
Marginal Cost of Funds based Lending Rate - Internal benchmark used by banks for loan pricing.
Spread
Additional margin charged by banks over the benchmark rate to determine your final loan interest rate.