A loan origination fee is a charge by a lender for processing a new loan application. This fee covers the costs of evaluating and approving the loan, including underwriting and administrative expenses. It is typically expressed as a percentage of the total loan amount, often ranging from 0.5% to 1%. Borrowers should be aware that the loan origination fee is separate from other costs, such as closing costs or interest rates. Understanding this fee can help borrowers compare different loan offers and make informed financial decisions when seeking loans from banks or other financial institutions.