What Is a Personal Loan Origination Fee?
An origination fee adds to a personal loan's costs, but may be worth paying if the APR is lowest among other options.
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Head of Content, Personal & Student Loans A personal loan origination fee is an upfront expense some lenders charge to cover administrative costs to process the loan. The fee is typically from 1% to 10% of the loan amount.
This fee might be called an underwriting, administrative or processing fee. Origination fees are also common on mortgages and federal student loans.
It’s important to compare origination fees between lenders and determine how they add to the overall cost of a personal loan.
Here’s more information on personal loan origination fees, what they cost and when it makes sense to pay the fee.
» MORE: Compare personal loans
How much is a personal loan origination fee?
Personal loan origination fees can be up to 12%, though they usually range from 1% to 10%. Amounts can vary by lender and state.
Factors that determine the fee amount include:
- Your credit score. You’re most likely to qualify with a lender that doesn’t charge origination fees if you have at least a good credit score (typically mid-600s or higher) and a low debt-to-income (DTI) ratio.
- Loan amount. Origination fees are usually assessed as a percentage of the loan amount, so you’ll pay more if you borrow a large amount.
- Repayment term. Some lenders may charge lower origination fees for loans with a long repayment term because you’ll pay more interest overall.
- Other information on your application. Other factors that can affect your origination fee amount include your income and whether you’ll have a loan co-signer.
The origination fee is accounted for in the loan’s annual percentage rate, or APR, which represents the true annual cost of borrowing when factoring in the interest rate and upfront fees.
Some lenders add the origination fee to the loan balance, but it's more common for a lender to deduct it from the loan. Because an origination fee can reduce your loan balance, be sure the borrowed amount is still enough to cover your expense after the fee is applied.
Origination fees by lender
Origination fees vary by lenders. Here’s what some major lenders charge.
| Lender | Origination fee |
|---|---|
| Best Egg | 0.99%-9.99% |
| Happy Money | Up to 7%. |
| Rocket Loans | Up to 9%. |
| SoFi | None required. |
| Upgrade | 1.85%-9.99%. |
| Wells Fargo | None. |
Personal loan origination fee example
Let’s say you need $20,000 to consolidate debt, and the loan you want has a 5% (or $1,000) origination fee. If your lender deducts the origination fee from your loan proceeds, you’d only get $19,000.
You’d have to request $21,053 to get the full amount you need. Once the 5% fee is applied — in this case, $1,053 — you will have $20,000 to use for consolidation.
You would make payments on the $21,053 balance, not the $20,000 you'd receive.
Use a personal loan calculator to see the impact an origination fee would have on your loan.
Is a personal loan origination fee worth it?
An origination fee may not be a reason to decline a loan offer. If you’re considering multiple loan offers, the APR is the best point of comparison because it includes both interest and origination fees.
In some cases, a loan with an origination fee may have a lower APR — and therefore cost less overall — than one without the fee.
Many lenders let you pre-qualify to check your potential loan amount, rate and repayment term, without affecting your credit score. Pre-qualify with multiple lenders to find the least expensive loan offer — even if that offer includes an origination fee.
Online lenders are more likely to charge the fee than banks and credit unions.
Though mortgage origination fees may be negotiable, this likely isn’t the case with personal loans.
Other personal loan fees to consider
Late fee: If you don’t make your loan payment on time, your lender can charge a late fee, though many offer a grace period (typically around 15 days) before charging it. Consider setting up automatic payments or due date reminders so you don’t forget to make your payment on time. A loan payment that’s more than 30 days late can negatively affect your credit score.
Non-sufficient funds fee: A lender may charge a non-sufficient funds (NSF) fee if your bank account balance is too low for the lender to debit it. This is also known as a returned check fee. If you miss the due date because the lender couldn’t withdraw funds, you may have to pay a late fee in addition to the NSF fee.
Prepayment fee: Prepayment fees aren’t as common on personal loans as they are on other types of loans like mortgages, but it’s a good idea to read through your loan agreement to ensure you won’t be charged for paying off your loan early.
Frequently Asked Questions
Can you negotiate a personal loan origination fee?
Most personal loan origination fees are non-negotiable, but it’s sometimes possible to negotiate origination fees for other types of loans, like mortgages.
Do you get an origination fee back?
Usually, you don’t get your origination fee back because it pays for the costs of processing your loan, however, some lenders may offer partial reimbursement if you pay off your loan early. Check with your lender about its policy.
Is a 10% origination fee high?
A 10% origination fee is on the high side for origination fees. A typical origination fee is 1% to 10% of the loan amount, though some lenders don’t assess this charge.
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