A commitment fee is a fee charged by a bank to keep open a line of credit or to continue to make available unused loan facilities. The fee is typically an annual charge made by the lender on the daily undrawn balance of the facility and is often expressed in basis points.
A nonrefundable fee or deposit refers to a charge for a product or service that will not be refunded if the product is returned or service declined. It often acts as a penalty charge where individuals frequently back out of commitments, ensuring a level of commitment from the client or customer.
