Types of Prepaid Recharges

As noted above, there are many different types of prepaid finance charges that lenders require borrowers to pay. Here are some of the most common:

• Origination fee: These are charges that a borrower pays when a new loan is processed. They usually range between 0.5% to 1% of the full value of the loan.
• Underwriting fee: This is a cost imposed by the lender to evaluate loan applications. In some cases, the lender may charge an underwriting fee over the origination fee, as is the case with some mortgages.
• Document fee: Also referred to as a doc fee, this is commonly used for car loans. Dealers and lenders charge this fee in order to prepare and process the loan paperwork.