Enter the principal loan amount and the loan fee rate into the calculator to determine the loan fee. This calculator can also evaluate any of the variables given the others are known.
Loan Fee Formula
The following formula is used to calculate the loan fee.
LF = P * r
Variables:
- LF is the loan fee ($)
- P is the principal loan amount ($)
- r is the loan fee rate (decimal)
To calculate the loan fee, multiply the principal loan amount by the loan fee rate. The result is the loan fee.
What is a Loan Fee?
A loan fee is a charge that a lender imposes on a borrower for the processing, underwriting, preparation, and establishment of a new loan. This fee is typically a percentage of the loan amount and is often referred to as points in the lending industry. The loan fee is usually paid upfront but can sometimes be rolled into the total loan amount.
How to Calculate Loan Fee?
The following steps outline how to calculate the Loan Fee.
- First, determine the principal loan amount ($).
- Next, determine the loan fee rate (decimal).
- Next, gather the formula from above = LF = P * r.
- Finally, calculate the Loan Fee.
- After inserting the variables and calculating the result, check your answer with the calculator above.
Example Problem :
Use the following variables as an example problem to test your knowledge.
principal loan amount ($) = 5000
loan fee rate (decimal) = 0.05
