Provision Fees Are: Definitions, Costs, and Easy Ways to Calculate

Admin BFI
15 August 2022
Provision Fees Are: Definitions, Costs, and Easy Ways to Calculate

A provision fee is one of the fees that must be paid by the debtor when the loan or credit has been approved. One example is the application for mortgage loans.

In addition to mortgages, other loans subject to provision fees include KTA (Unsecured Credit), KMG (Multipurpose Credit), and other types of loans in accordance with the policies applicable to each bank or financial institution.

So, what is a provision fee, how much is it, and how do you calculate this fee? Let's get to know more about provision fees in the following article!


Definition of Provision Fee

Provision fees are fees that must be paid when the loan application is approved. This is done once, namely at the beginning of the agreement by deducting part of the loan granted.

In other words, a provision fee is a number of fees that the debtor must pay to the creditor as a handling fee for the disbursement of an approved loan. These fees are deducted directly from the total loan submitted by the debtor with different amounts, depending on the applicable bank policy.

Although generally the provision fee is deducted directly from the liquid loan amount, on certain loans or credit, the creditor will ask the debtor to pay the provision fee separately.

Difference between Provision Fee and Administration Fee

After you know that the provison fee is the number of funds that must be paid by the debtor, maybe you will wonder what is the difference between the provision fee and the administrative fee, considering that at first glance they have the same meaning.

Let's look at the following table.

Difference between Provision Fee and Administration Fee
No. Provision Fee Administration Fee
1. Provision fees are used to fund the needs needed during the loan approval process. For example, marketing commissions, photocopies of documents or files, and so on. Administrative fees are used for the purposes of managing documents during the mortgage application process.
2. Provision fees range from 0.5% to 3.5% of the total credit value given by the creditor to the debtor. Administration fees range from IDR 250,000 to IDR 500,000.
3. Paid once, ie before the credit contract takes place. Usually paid before the mortgage or credit process is carried out.

Perbedaan Biaya Provisi dengan Biaya Kontinjensi

Sedangkan untuk perbedaan antara biaya provisi dan biaya kontinjensi dapat Anda lihat sebagai berikut.

Difference between Provision Fee and Contingent Fee
No. Provision Fee Contingent Fee

Provision costs are a liability. This is in accordance with the Statement of Financial Accounting Standards (PSAK).

Liabilities are obligations or can also be interpreted as debts that must be paid to other parties due to past events.

Contingent costs do not include PSAK which is based on the possibility of the future.

In other words, the amount or amount can vary (uncertain) and have the potential to incur large nominal costs.

2. Provision fees are additional funds when a credit or loan is disbursed. Contingent costs are funds that are used as collateral for the repurchase of a property that is someone's debt.

Amount of Provision Fee

Each bank or financial institution has a different amount of provision fees. Generally, it ranges from 0.5-3.5% of the total credit applied for.

The details of the amount of the provision fee below can be used as a reference.

Biaya Provisi Adalah

Image Source: Freepik/

1. Bank Mandiri

For prospective debtors who want to buy property in the form of houses, shop houses, or apartments through Bank Mandiri, they are required to pay a provision fee of 1% of the approved loan amount.

2. Bank BCA (KPR BCA Fix and Cap)

Bank BCA offers convenience for the purchase of new and used homes with a provision fee of 1% of the loan amount submitted.

3. Bank BRI

Some products at BRI are subject to a provision fee of 1%. Meanwhile, the cost of motorized vehicle loans is free from provision fees.


Quoted directly from the official OCBC website, the fees charged range from 1%-5% with a tenor of up to 36 months.

Those are the details of provision fees that you can use as a reference in product selection. Next, let's discuss how to calculate the correct provision fee to make it easier for you to determine the amount of the existing loan.

How to Calculate Provision Fee

Provision fees are fees that must be paid in advance when the loan application is approved. These funds are usually deducted automatically when you receive a loan disbursement.

Then how to calculate it? How to calculate it is quite easy. You only need to multiply the total loan amount by the percentage of the applicable provision fee.

To understand it further, let's look at the following example.

Provision fee calculation simulation

Credit score: IDR 350,000,000

Provision fee: 1.5%

Calculation of provision fee: IDR 350,000,000 x 1.5% = IDR 5,250,000

Total loan IDR 350,000,000 - IDR 5,250,000 = IDR 344,750,000

From the example above, it can be concluded that the provision fee that you need to pay is IDR 5,250,000, while the loan obtained after being charged a provision fee is IDR 344,750,000.

Tips for Getting Free Provision Fee

In certain conditions, you can get the provision fee for free. The tips are as follows.

1. Update the latest information about the bank without any fees. Look carefully at which bank or financial institution applies the free provision fee, on any type of loan and the period.

2. Make sure you have a steady job. Those who have permanent jobs tend to be preferred and it is easy to get free provision fees from the Bank. Not only a permanent job, but if you have a business with an income of 3 million per month, you also have the opportunity to get free provision fees.

3. Included in the productive age. Apart from the 2 factors above, another requirement is that the age of the debtor must be in the productive category. Namely aged 21-51 years.

Other Fees Related to Loan Application

In addition to provision fees and administrative costs, in applying for a loan there are several other costs.

1. Annual Fee

The annual fee is the number of funds you need to pay in paying off the credit per year. The amount varies, depending on the loan period and bank policy.

For example, you have a loan of IDR 200 million with an annual fee of 1% in the first year. So, in the first year, you are expected to be able to pay a loan of IDR 2 million.

After the annual fee is paid, you will be charged a fixed annual fee of IDR 50,000 for installment payments in the following years. The amount of this fixed annual fee is determined from the applicable loan period.

2. Insurance fee

The cost of insurance on a loan is applied as a guarantor of protection for the debtor if things go wrong. For example, an accident or death.

With this insurance fee, debtors do not need to worry if there are still outstanding loans or loans. Because the rest of the existing loan will be covered or repaid by the insurance.

3. Notary Fee

This cost is common when buying a mortgaged house. No need to worry, the notary fee is usually determined by the bank with a price range of IDR 250,000 to IDR 750,000. So, you don't have to bother looking for a notary out there.

4. Bank Administration fee

In addition to the application of provision fees, banks also tend to charge additional fees which are usually done at the beginning, namely bank administration fees. As an example of a mortgage, usually, the mortgage administration fee is 0.10% of the credit ceiling or a minimum of IDR 400,000. The higher the price of the house you want to buy with a mortgage, the higher the administrative costs charged.

5. Late charge

Late fines are applied to debtors who experience delays in installment payments. The amount depends on the policy of the bank where you borrow.

Even so, make sure not to pay late, okay?

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This is the information about Provision Fees: Definition, Costs, and Easy Ways to Calculate It. Hopefully, it can help all readers to understand what a provision fee is.

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