Borrowing money can be expensive. Beyond the interest rate, there can be a host of fees, including origination fees. An origination fee is an upfront fee that some lenders charge when you get a loan. The better your credit, the easier it may be for you to qualify for loans without origination fees. But if you have bad credit or fair credit, you're more likely to have to pay one.
Here’s everything you need to know about these fees, including how to lower or avoid them.
What is an origination fee?
An origination fee is an upfront fee that you may pay on different types of loans, including personal loans. It’s often calculated as a percentage of the loan amount — typically this could be anywhere from 1% to 10%. For example, a 5% origination fee on a $15,000 personal loan would amount to $750.
Why is there an origination fee?
“Personal loan lenders can charge origination fees to cover administrative costs associated with processing loan applications, funding the loans, and managing and handling customer service over the life of the loan,” said Kyle Enright, president of lending at Achieve.
Because of the reasons behind these fees, you may also see them referred to as underwriting or administrative fees. Just know that any upfront fee charged to get a loan can increase your overall cost and decrease the loan amount you receive.
Factors affecting origination fees
Generally speaking, the riskier the lender thinks you are as a borrower, the higher the origination fee, though underwriting criteria differ between lenders. Here’s a quick breakdown of some of these factors and how they may impact your fee:
- Credit score: The higher your score, the lower your origination fee is likely to be.
- Income: Those who earn more may be charged a lower or no origination fee.
- Loan amount: Smaller loans are considered a safer bet for lenders, often resulting in a smaller fee.
- Loan term: Longer terms are deemed riskier, so they’re typically associated with a higher origination fee.
However, some lenders do charge a flat origination fee for all applicants.
How origination fees impact you
Origination fees are deducted from the requested loan amount. For example, say you take out a $10,000 personal loan with a 6% origination fee, a five-year term, and an 8% interest rate. The 6% origination fee deducts $600 from your loan amount, leaving you with $9,400.
But those aren’t the only things you need to worry about here.
“Most lenders will deduct the amount of the origination fee from the loan proceeds. So, if you’re looking for a loan of a specific amount, you may need to request a higher loan amount,” said Enright. “Consumers should ask about the policy for handling origination fees of each lender they’re talking to.”
Because these fees can impact how much money you actually receive, they may also impact your decision to borrow in the first place. However, these fees aren’t required with all personal loans, so you may wish to shop around to find one that doesn’t charge them.
You should note that lenders that don’t charge this fee may charge higher interest rates, which could end up costing more long-term. So, you’ll need to look closely at the APR (which is a reflection of your total loan costs, including the interest rate and any origination fee) before going with a lender.
Additional personal loan factors to consider
The origination fee certainly isn’t the only factor you should consider when taking out a loan.
- Loan types: Personal loans are very flexible when it comes to what you can use them for, but if you have a specific need, another type of loan may be a better option. For example, homeowners looking to finance improvements to their house may also consider a home equity line of credit (HELOC). Additionally, most personal loans are unsecured, which means collateral is not required.
- APR: This is the most impactful factor when it comes to how much you’ll pay to borrow. It’s best to seek out the lowest rates available, as the lower your rate, the less you’ll pay in interest. Personal loan APRs generally range from 4.60% to 35.99%.
- Repayment terms: Most lenders typically offer 1 to 7 years to repay a personal loan. Picking a shorter term typically means you’ll pay more per month, but less overall, and vice versa. So, you’ll want to get the shortest term that you can afford.
- Loan amounts: Generally, personal loans range from $600 to $100,000 or more, depending on the lender. Some lenders will offer smaller loan amounts than others, so make sure they can cover your loan needs — including any origination fee. Prequalify with lenders first to get an idea of how much of a personal loan you can get.
- Time to fund: If you need quick cash, there are lenders that can cater to those needs. Otherwise, you can broaden your search to include more traditional lenders. Most lenders usually fund your loan in one week, but there are some who can fund as soon as the same or next business day after approval.
- Minimum credit score: Your credit score will be an important qualification factor. If you don’t have perfect credit, you’ll want to look closely at the lender’s minimum credit score requirement. Good to excellent credit is usually required to qualify for a personal loan, and most lenders prefer a FICO score of 670 or higher. But some lenders offer personal loans for bad credit.
Advertiser DisclosureOverview
Lightstream is one of three Credible partner lenders to offer loan amounts up to $100,000, which makes it ideal for financing large expenses like home improvements or weddings. Funds are available as soon as the same day you apply, and you'll have up to 12 years to repay certain types of loans, including home improvement loans, RV loans, and boat loans. There are no origination fees, and rates are low — as of this writing, Lightstream's lowest APR beats SoFi's advertised lowest APR by 1 percentage point. But you'll need good credit to qualify.
Note that unlike most lenders, Lightstream does not let you prequalify. Nor does it provide a contact phone number next to its customer service hours on its website.
Repayment terms
2 - 12 years, depending on loan purpose
Eligibility
Available in all states except RI and VT
Time to get funds
As soon as the next business day
Loan uses
Credit card refinancing, debt consolidation, home improvement, and other purposes
Read full reviewOverview
Upstart has one of the lowest available APRs of Credible partner lenders and of all non-partners we reviewed, making it a good choice for well-qualified applicants. However, it's also is one of few lenders that doesn't have a minimum credit score requirement (if you apply on the lender's website), which makes it an option if you have bad credit or no credit history. Upstart may charge an origination fee as high as 12%, but good-credit borrowers may not be charged one at all.
Trustpilot gives Upstart 4.9 stars, which is the highest of all lenders we reviewed.
Time to get funds
As soon as 1 to 3 business days
Loan uses
Pay off credit cards, consolidate debt, relocate, make a large purchase, and other purposes
Read full reviewOverview
Discover Personal Loans offers low APRs, repayment terms up to seven years, no origination fees, nationwide availability, and doesn't require your Social Security number to prequalify on its site. You'll need to have an annual income of at least $40,000, and a FICO score 660 or higher, to be eligible. If your credit score is fair or poor, you'll need to go elsewhere, as Discover doesn't allow cosigners.
Funds are available as soon as the next business day after loan approval.
Eligibility
Available in all 50 states
Time to get funds
Funds can be sent as soon as the next business day after acceptance
Loan uses
Auto repair, credit card refinancing, debt consolidation, home remodel or repair, major purchase, medical expenses, taxes, vacation, and wedding
Read full reviewOverview
PenFed is a credit union that offers personal loans to applicants with good credit. Though you'll need to become a member to receive a loan, membership is open to everyone. PenFed shines with no origination fees, small available loan amounts, and low interest rates. If you don't have a FICO score above 700, you may not qualify on your own, but can apply with a cosigner with good credit — which is not something most lenders offer.
PenFed doesn't have a minimum income amount, and offers live chat and an entirely online loan application process.
Fees
Unsuccessful payment fee, late fee
Time to get funds
Typically 1 to 2 business days after verification
Loan uses
Debt consolidation, home improvement, credit card refinancing
Read full reviewOverview
Upgrade has a suite of features that make it a very attractive lender: competitive interest rates, discounts for direct pay and autopay, as soon as same-day funding, up to seven-year repayment terms, and nationwide availability. Plus, loans are available to fair-credit borrowers, and you don't need to input your Social Security number to prequalify on the website. Upgrade even offers secured personal loans, which is not common among lenders.
However, Upgrade does charge an origination fee of 1.85% to 9.99%. You must have a FICO score of at least 600 and a minimum income of $25,000 annually to qualify.
Loan amount
$1,000 to $50,000 ($3,005 minimum in GA; $6,600 minimum in MA)
Loan uses
Credit card refinancing, debt consolidation, home improvement, major purchase, other
Read full reviewOverview
SoFi stands out for offering no-fee personal loans with competitive rates, high loan amounts, long loan terms, discounts for autopay and direct pay, and funding as soon as the same day. Plus, SoFi prioritizes convenience for existing and potential customers with features like live chat and an easy prequalification process that doesn't require your Social Security number. Once you have a loan with SoFi, you may be eligible for unemployment protection and unemployment assistance.
The main catch is that you need to qualify for a loan with SoFi, which can be hard to do if you don't have good credit. You also won't be able to apply with a cosigner, since SoFi doesn't accept cosigners; nor does it offer secured personal loans.
Fees
Option to pay an origination fee (up to 6%) in exchange for a lower rate
Time to get funds
Typically within a few days, given approval and bank account verification, but sometimes within the same day
Loan uses
Solely for personal, family, or household uses
Read full reviewOverview
Best Egg is a solid lender for a wide range of borrowers. It offers competitive rates, reasonable loan terms and amounts, and personal loans for fair credit. You'll need a FICO score of at least 600 to qualify, but the lower your score, the higher your APR may be. The APR includes the interest rate and origination fees, which range from 0.99% to 8.99% with Best Egg.
Note that if you successfully prequalify with Best Egg, you may be more likely to be approved for the loan relative to other lenders you prequalify with. Based on Credible data, borrowers who chose to apply for a loan with Best Egg were more than twice as likely to be approved (relative to most other Credible partners).
Fees
Origination fee, late fee, unsuccessful payment fee, check processing fee
Eligibility
Available in all states except DC, IA, VT, and WV
Time to get funds
As soon as 1 to 3 business days after successful verification
Loan uses
Credit card refinancing, debt consolidation, home improvement, and other purposes
Read full reviewOverview
LendingClub is a solid lender for good credit borrowers and some fair credit borrowers that apply directly on its website. It's easy to prequalify with LendingClub, especially if you're uncomfortable providing your Social Security number, as the company doesn't require it at the prequalification stage. (You will need to provide it if you move forward with a full application.)
While prequalification is not a guarantee that you'll be approved for a loan, LendingClub does a better job than most other Credible partner lenders at approving applicants that have successfully prequalified. In other words, you're less likely to have your application declined once you apply (if you've already prequalified). LendingClub may charge an origination fee between 3% and 6%.
Eligibility
Available in all 50 states
Time to get funds
Usually takes about 2 days
Loan uses
Debt consolidation, paying off credit cards
Read full reviewOverview
Avant personal loans are a good choice for borrowers with bad credit looking for small- to moderate-sized personal loans. Loans are available up to $35,000 and you could get the money as soon as the next business day after approval. Plus, Avant is more likely than some lenders to approve the applications of borrowers who've prequalified with Avant. However, the lender charges an origination fee up to 4.75%, and its top-range interest rates are among the highest of the lenders we reviewed.
Fees
Origination fee, late fee, dishonored payment fee
Eligibility
Available in all states except HI, IA, MA, ME, NY, VT, and WV
Time to get funds
As soon as the next business day (if approved by 4:30 p.m. CT on a weekday)
Loan uses
Debt consolidation, emergency expense, life event, home improvement, and other purposes
Repayment terms
1 to 5 years (2 to 5 years through Credible)
Read full reviewOverview
It’s worth considering a personal loan through Splash if you have good credit (ideally, a FICO score above 710). The platform offers loans from a wide range of lenders, and next-day funding is available. Plus, Splash has a live chat feature so you can get real-time answers without having to wait on hold or for an email. Loans are available up to $100,000 if you apply via Splash’s website.
Rates are competitive, but borrowers with excellent credit may find lower APRs elsewhere. If you need a repayment term longer than five years, you’ll need to look elsewhere as well.
Loan amount
$5,000 - $100,000 (up to $35,000 on Credible)
Eligibility
Available in all states except VT. OH and NM net disbursed amount must be greater than $5,000. MA must be greater than $6,000
Time to get funds
Same day available, typically 1-3 days
Loan uses
Debt consolidation, home improvement, medical expenses, major purchases
Read full reviewOverview
Universal Credit is one of a handful of lenders that offers personal loans for bad credit. If your FICO credit score is at least 560, you may be eligible for a Universal Credit personal loan. It offers loan amounts up to $50,000, repayment terms up to seven years, and discounts for direct pay and autopay. Funds are available as soon as the next business day after loan approval.
Note that rates and fees can be relatively high — you may pay an origination fee from 5.25% to 9.99%, and APRs start at 11.69%. If you get a loan with a high interest rate, consider refinancing your personal loan at a lower rate once you've improved your credit score.
Eligibility
A U.S. citizen or permanent resident; not available in DC, IA, SC, WV
Time to get funds
As soon as 1 business day after acceptance
Loan uses
Debt consolidation, pay off credit cards, home improvements, unexpected expenses, home and auto repairs, weddings, and other major purchases
Read full reviewOverview
Happy Money has been in operation since 2009 (formerly known as Payoff). It's an option for fair-credit borrowers (plus those with better credit), and notably has a relatively low top-end APR. In other words, you could qualify for a lower rate with Happy Money with fair credit, relative to other lenders that offer fair-credit loans. The company does charge an origination fee on some loans, up to 5%, but that's not as high as some other lenders' origination fees.
You should be prepared to wait a few days to get your money, as funding can take three to five days once approved. And loans aren't available in Massachusetts or Nevada. Happy Money has an A+ rating with the BBB and is ideal for debt consolidation and credit card consolidation loans.
Eligibility
Available in all states except MA, MS, NV, and OH
Time to get funds
As soon as 2 - 5 business days after verification
Loan uses
Debt consolidation and credit card consolidation only
Read full reviewOverview
BHG Money stands out for offering the largest loan amounts — up to $200,000 — of any Credible partner lenders. Simply put, if you need an unsecured personal loan over $100,000, there are very few places to look, but BHG is one. You'll have up to 10 years to repay the loan, but you'll need an annual income of at least $100,000 to qualify and a FICO score that's 660 or higher. However, if you have a cosigner that meets these requirements, BHG will consider your application.
Loan amounts start at $20,000, so look elsewhere for small loans. And BHG charges a modest origination fee between 2% and 4%, depending on your financial profile. Loan funds are available within three to 14 days of loan approval. Note that you can't prequalify with BHG.
Fees
Origination fees, late fees
Eligibility
Available in all states except Maryland and Illinois
Loan uses
Debt consolidation, baby (adoption), engagement ring financing, moving (relocation), business, home improvement, special occasion, cosmetic procedures, major purchase, taxes, credit card refinancing, medical expenses, vacation, wedding, other
Read full reviewFees
Origination Fee, $15 Late Fee, $25 NSF Fee
Eligibility
Available in all states except CO, CT, ME, NV, NH, TN, VT, WV, WY, and all U.S. Territories
Time to get funds
Funds typically deposited into your account in 1 business day13
Loan uses
Debt consolidation, credit card refinancing
Read full reviewOverview
OneMain Financial has multiple options for bad-credit personal loans. The minimum credit score required is 540, which means you could get a loan with bad credit (FICO below 580). Plus, cosigners are allowed — a cosigner is someone (ideally, with good credit) who promises to repay the loan if you can't, which can make it easier to qualify or lower your rate. And, secured personal loans are available. You secure a loan with collateral, which may also help you qualify or lower your rate.
Rates are higher than competitors and OneMain charges origination fees as either a flat fee up to $500, or a percentage from 1% to 10% (depending on your state of residence). Note that even if you prequalify for a personal loan with OneMain, getting approved isn't a given.
Fees
Origination fee, unsuccessful payment fee, late fee
Eligibility
Must have photo I.D. issued by U.S. federal, state or local government
Time to get funds
As soon as 1 to 2 days after acceptance
Loan use
All except business, and education
Read full reviewFAQ
How can I avoid origination fees?
Generally, if a lender charges origination fees, you can’t really avoid them. However, having excellent credit and a high income may also help you reduce origination fees, depending on the lender. And you may even be able to get the lender to waive the fee altogether if you agree to pay a higher interest rate or show a better offer from another lender. The best option, however, is usually to get a lender that doesn’t charge this fee in the first place.
Can I find personal loans with no origination fees?
Yes. In fact, many online lenders do not charge origination fees. You should see that listed on lenders’ websites — either on the personal loan information page or within the FAQ section. You may, however, find that these lenders also come with higher interest rates. Or they may have higher credit score requirements.
How do origination fees differ between personal loans and other types of loans?
Personal loan origination fees (which can range up to 10% or more) tend to be higher than you’ll find with other loans, such as mortgages, where they can be less than 1%. Unlike personal loan fees, other types of loans may have fees that are set or regulated by the government (think: federal student loans), rather than the lender. So, it’s important to understand how your loan works before signing up.
Meet the expert:
Devon Delfino
Devon Delfino is an independent writer specializing in personal finance. Her work has been featured in publications such as the L.A. Times, U.S. News and World Report, Mashable, The Startup, Business Insider, Forbes, MarketWatch, CNBC, and USA Today, among others.