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Meaning / Definition of

Fee Paid From

Categories: Loan and Mortgage,

There are two methods that determine how fees are handled in a loan. The fee can be paid from the proceeds or added to the principal. Federal loans have their fees paid from proceeds, while private loans usually have the fee added to the principal. As an example, with a $10,000 loan with a 5% fee, if the fee is paid from proceeds, you would receive a check for $9,500, and the principal amount of the loan would be $10,000. If the fee is added to the proceeds, you would receive a check for $10,000, and the principal amount would be $10,500.

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