Before accepting an unsecured debt consolidation loan, borrowers must account for upfront origination fees deducted directly from loan disbursement proceeds.
1. Net Disbursement Calculation Example
| Loan Amount Requested | Origination Fee % | Fee Dollar Amount Deducted | Net Cash Disbursed to Pay Off Debt |
|---|---|---|---|
| $10,000 | 3.0% | $300 | $9,700 (Leaves $300 shortfall) |
| $20,000 | 5.0% | $1,000 | $19,000 (Leaves $1,000 shortfall) |
| $30,000 | 7.99% | $2,397 | $27,603 (Leaves $2,397 shortfall) |
💡 Pre-Funding Rule
Always calculate the net loan proceeds after origination fees to ensure you borrow enough to pay off 100% of your targeted credit card balances.