What is an origination fee on a loan everfi?

An origination fee is a one-time fee charged by a lender to process a loan application. This fee is typically expressed as a percentage of the total loan amount and is used to cover the cost of underwriting and approving the loan. Origination fees are common for many types of loans, including personal loans, mortgages, and small business loans.

The origination fee is usually deducted from the loan amount before it is disbursed to the borrower. For example, if a borrower is approved for a $10,000 loan with a 2% origination fee, the lender would deduct $200 from the loan amount, leaving the borrower with $9,800 to use.

It's important to factor in the origination fee when considering the total cost of borrowing and comparing loan offers from different lenders. While a lower interest rate may seem more attractive, a higher origination fee could ultimately make the loan more expensive.

Some lenders may offer the option to roll the origination fee into the loan amount, effectively financing the fee and allowing the borrower to pay it off over time. However, this can increase the total amount of interest paid over the life of the loan.