If a broker fee is labeled as a finance charge, what implication does this have on the loan?

When a broker fee is labeled as a finance charge, it indicates that this fee contributes to the overall cost of borrowing the money for the loan. Finance charges are costs associated with obtaining credit and can include interest payments, fees, and the cost of insurance. Thus, when a broker fee falls into this category, it directly adds to the total amount that the borrower will have to pay over the course of the loan.

This is significant because understanding how fees are categorized helps borrowers assess the true cost of their loan, which is essential for making informed financial decisions. By recognizing that finance charges increase the total cost of the loan, borrowers are better equipped to compare offers from different lenders and to evaluate the affordability of the loan over time.