What Is an Origination Fee on a Personal Loan?
Written by
Jeanine Skowronski
Edited by
Melanie Grafil
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A personal loan origination fee is an upfront, one-time charge you pay for a lender to process your loan application. It’s typically expressed as a percentage and costs between 1% and 8% of your loan’s total, though some lenders charge more and a few don’t impose origination fees at all.
Lenders usually deduct origination fees from your personal loan before funds are disbursed, so these charges can affect your funding needs and up your borrowing costs.
This guide will explain personal loan origination fees, along with their trade-offs.
Why Do Lenders Charge Origination Fees?
Lenders primarily charge origination fees to cover the administrative costs of processing personal loan applications.
“Underwriting a loan takes time and people,” said Joseph Camberato, CEO at National Business Capital. “You’re paying for the processing, the paperwork, the admin team that reviews your info, runs the numbers, and gets your loan set up … It’s not just a random charge. It’s what helps lenders keep things moving.”
Lenders also charge origination fees to increase revenue, offset low interest rates and reduce the risk of loan default. This need to reduce risk is why origination fees are more common or higher among personal loans for bad credit.
Keep in Mind
An origination fee might be called a different name, depending on the lender. Some examples include: sign-up fee, upfront fee and underwriting fee.
How Origination Fees Affect Your Loan Amount
Borrowing $15,000 with a 5% origination fee:
- Fee: $750
- Loan amount after fee: $14,250
- Result: You receive less than the amount you requested.
To receive the full $15,000:
- You’ll need to borrow an additional $790 to cover the fee.
- This increases your loan principal, leading to higher interest over the loan term.
This chart illustrates how changing the requested loan amount to account for that 5% origination will affect your total borrowing costs, assuming a 60-month term and a 10% annual percentage rate (APR).
| Total Principal | Total Interest | Origination Fee | Total Cost | |
|---|---|---|---|---|
| Loan A | $15,790 | $4,339 | $790 | $20,919 |
| Loan B | $15,000 | $4,122 | $750 | $19,872 |
As you can see, you’d end up paying an extra $1,047 to borrow $15,000 vs. $14,250.
The next chart provides additional examples of how different origination fees can impact borrowing costs. All examples assume a 60-month loan term at a 10% APR with amounts rounded up to the nearest dollar.
| 0% Fee | 5% Fee | 8% Fee | |
|---|---|---|---|
| Desired loan amount | $5,000 | $5,000 | $5,000 |
| Total amount to borrow | $5,000 | $5,264 | $5,435 |
| Origination fee | $0 | $263 | $435 |
| Total interest | $1,374 | $1,447 | $1,494 |
| Total interest and fee | $1,374 | $1,710 | $1,929 |
| Monthly payment | $106 | $112 | $115 |
Do All Personal Loans Have Origination Fees?
Not all lenders charge origination fees, and many that do offer ranges with low or even fee-free options for top-tier applicants.
“Every lender has its own criteria for determining origination fees, but they usually base them on some combination of the amount of the loan, length of the loan term, applicant’s credit history and credit score, and the internal risk assessment model each lender has,” said Kyle Enright, president of Achieve Lending.
Traditional banks and credit unions often charge lower origination fees than online lenders, which are known for faster loan application turnaround times. Personal loan origination fees can also vary by location, as they’re subject to state-level regulations.
Origination Fees From Top Lenders
Most lenders charge origination fees as a 1% to 8% percentage of your loan total. However, for bad credit applicants, these charges can be higher — between 10% and 12%. Some lenders charge a flat fee, usually between $25 and $500, as opposed to a percentage.
Here’s a summary:
- Typical fees: Most lenders charge 1% to 8% of your loan total.
- For bad credit: Fees can be higher, ranging from 10% to 12%.
- Flat fees: Some lenders charge a flat fee, usually $25 to $500, instead of a percentage.
Keep in mind, a lender could charge a higher origination fee, but offer a lower APR than a competitor. You’ll need to consider a full offer to find the best loan for you.
“Consumers looking for a personal loan should make sure to inquire about the origination fee up front, and include it in their review process and calculations,” Enright said.
The chart below outlines origination fee and APR ranges among top personal loan providers.
| Lender | Origination Fee | APR Range | Fee-Free Option? |
|---|---|---|---|
| Avant | Up to 9.99% | 9.95% to 35.99% | No |
| Discover® Personal Loans | 0% | 7.99% to 24.99% | Yes |
| LendingClub | 0% to 8% | 7.90% to 35.99% | Yes |
| LightStream | 0% | 6.49% to 25.14% | Yes |
| SoFi® | 0% to 7% | 8.99% to 35.49%* | Yes |
| Upstart | 0% to 12% | 6.6% to 35.99% | Yes |
Can You Negotiate or Avoid Origination Fees?
You can negotiate or avoid personal loan origination fees, but doing so may require some legwork. Try these strategies to minimize this extra cost when getting a personal loan.
Shop Around
Some lenders actively advertise “no origination fees,” but be sure to read the fine print for hidden catches. While looking for the top personal loans, you’ll also want to check that the lender offers competitive APRs, as skipping an origination fee isn’t worthwhile if it results in higher interest payments over the loan’s term.
Ask the Lender Directly
A lender might negotiate an origination fee, particularly if you have a good credit score and a strong financial profile.
“Let the lender know you’re shopping around,” Camberato said. “You can also ask if using a cosigner might help knock the fee down or remove it altogether. It doesn’t always work, but it never hurts to ask. Just be direct and respectful.”
Improve Your Credit
The better your credit, the better the loan terms you’re eligible for. You can boost your credit score by finding and disputing errors on your credit report, paying down large balances, or asking for a higher credit card limit.
You can build strong credit in the long term by paying all loans on time, keeping debts low and adding a mix of credit accounts over time.
Look for Prequalified Offers
Prequalification provides you with a conditional estimate of important loan terms, including your APR and origination fee. Lenders don’t usually run a hard credit check during the prequalification process, so they’re a great way to comparison-shop for the best offer without dinging your credit score.
You can also leverage multiple prequalified offers in lender negotiations, potentially getting your preferred provider to lower or waive its origination fee.
Are Origination Fees Worth It?
Ultimately, an origination fee is worthwhile if it’s justified by the loan’s full terms, including its APR, amount, term, monthly payment and overall cost structure.
“Good offers don’t always last,” Camberato said. “Lenders change their terms, your credit could shift, rates could go up. If you’re sitting on a deal that works for you, it’s often smarter to take it than wait around trying to save a few bucks on a fee.”
Pros
- Can correlate to faster funding
- Sometimes associated with low APR offers
- Enable easier loan access for people with bad credit
- Possible to avoid or negotiate
Cons
- Upfront cost
- Sometimes quite pricey — up to 12% of the borrowed amount
- Reduces loan proceeds
- Can increase borrowing costs
No one wants to pay an extra fee, but some serve a purpose — and can be a means to an end, depending on your financial profile. Knowing the pros and cons of personal loan origination fees can help you determine when one is worthwhile.
FAQs About Personal Loan Origination Fees
Learn more about what you should know about origination fees on personal loans with these answers.- What should you look for in the origination fee fine print?
- You should check if the lender charges an origination fee, and, if so, what amount you can expect to pay. Determine if you cover the fee separately or if the lender subtracts it from your final loan amount. That way, you can decide whether to request more funds.
- Is an origination fee part of the interest rate?
- Origination fees are an upfront charge separate from your loan's interest rate. Your interest rate is the cost of borrowing, while origination fees typically cover the administrative costs associated with processing a loan.
- Can you get a loan for the full amount you need with an origination fee?
- Lenders typically deduct an origination fee from your loan's total, meaning you'll receive less funding than requested. You can get the full amount if you request enough funds to cover the origination fee. However, this move increases your total borrowing costs. Some lenders let you pay origination fees out-of-pocket, but this practice is the exception, not the norm, and sometimes may be a sign of a personal loan scam.
- Are origination fees tax-deductible?
- Personal loan origination fees aren't tax-deductible, though you can sometimes deduct personal loan interest if you used the funds for business, qualified education, or taxable investment expenses.
*Fixed rates from 8.99% APR to 35.49% APR. APR reflects the 0.25% autopay discount and a 0.25% direct deposit discount.
SoFi Platform personal loans are made either by SoFi Bank, N.A. or , Cross River Bank, a New Jersey State Chartered Commercial Bank, Member FDIC, Equal Housing Lender. SoFi may receive compensation if you take out a loan originated by Cross River Bank. These rate ranges are current as of April 24, 2025 and are subject to change without notice. Not all rates and amounts available in all states. See SoFi Personal Loan eligibility details at https://www.sofi.com/eligibility-criteria/#eligibility-personal. Not all applicants qualify for the lowest rate. Lowest rates reserved for the most creditworthy borrowers. Your actual rate will be within the range of rates listed above and will depend on a variety of factors, including evaluation of your credit worthiness, income, and other factors.
Loan amounts range from $5,000- $100,000. The APR is the cost of credit as a yearly rate and reflects both your interest rate and an origination fee of 9.99% of your loan amount for Cross River Bank originated loans which will be deducted from any loan proceeds you receive and for SoFi Bank originated loans have an origination fee of 0%-7%, will be deducted from any loan proceeds you receive.
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- Citi. 2024. "What is a Personal Loan Origination Fee?"
- Discover. 2025. "What Is a Loan Origination Fee?"
- MyFICO. "Banks vs. Online Lenders: Which Option Should Borrowers Choose?"
