The best origination fee for a personal loan is none at all. If you must pay an origination fee, then you will want to aim for one that’s between 1% and 5%. Whether this is possible, however, depends on your credit profile.
A personal loan provides a lump sum of funds that you can use for almost anything. Some lenders will charge an origination fee during the process.
Generally, an origination fee is a percentage of your total loan amount. Origination fees typically range from 1% to 6%, although some can exceed 10%. If your lender charges an origination fee, it will usually be deducted from the proceeds of your loan or rolled into your loan balance.
While origination fees are referred to as “upfront fees,” you don’t typically have to pay them out of pocket before you get your loan.
Imagine that a lender approves you for a $50,000 personal loan that has a 5% origination fee. That means you will receive $47,500 (assuming your loan doesn’t have any other upfront fees).
To break it down, your origination fee would be $2,500 (or, 5% of $50,000). Thus, $50,000 minus your origination fee of $2,500 equals a loan disbursement of $47,500.
The best origination fee for a personal loan is none at all. If you must pay an origination fee, then you will want to aim for one that’s between 1% and 5%. Whether this is possible, however, depends on your credit profile.
No. Even if you have bad or fair credit, you should avoid upfront (or, in this context, out-of-pocket) fees when taking out a personal loan. Personal loans that charge out-of-pocket fees could be a sign of predatory lending.
Maybe. Some lenders — SoFi, for instance — may allow you to opt in for an origination fee in exchange for a lower APR. Also, if you have excellent credit, your lender might remove its origination fee if you ask.