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What is a no origination fee personal loan?
An origination fee is a one-time expense you may have to pay
when you receive a personal loan. While every lender is different, most lenders
will deduct your origination fee from your loan balance. In most cases,
origination fees range from 1% to 10% of the total amount. These fees are
usually based on factors like your credit score, loan amount, repayment term,
and whether you have a cosigner. A no origination fee personal loan is exactly
what it sounds like: a loan that doesn’t include an origination fee.
The benefits of a no origination fee personal loan
If you take out a no origination fee personal loan, you
won’t be responsible for an origination fee on top of interest and other fees.
As long as you can land a low interest rate and favorable terms, this may save
you money on the overall cost of your loan. It will also make it easier to
determine your ideal borrowing amount because you won’t have to account for a
fee that may be deducted from your proceeds.
How to Get a Personal Loan With No Origination Fees
Follow these steps to get a personal loan with no
- Check your credit: First, find out where you stand credit
wise so you know what loans you may qualify for. Go to AnnualCreditReport.com
to pull free copies of your reports from Equifax, Experian, and TransUnion. If
you notice any errors or inaccuracies, dispute them with the appropriate
- Decide how much to borrow: Now figure out what you’ll do
with the loan proceeds and how much you can afford to repay. This information will
give you an idea of the ideal loan amount to ask for.
- Shop around: Not all personal loans with no origination fee
are created equal. Do your research and compare the rates, terms, fees, and
perks of all your options. Our list of loans is a great place to start.
- Prequalify: Many lenders offer prequalification tools you
can use to check your no origination fee loan offers without any impact to your
credit. To prequalify, simply fill out a short online form with some basic
- Apply: Once you decide on a personal loan with no
origination fee, fill out the lender’s application online or in-person. Be
prepared to submit documents like your government-issued ID, pay stubs, tax
forms, and bank statements.
- Wait for approval: Most lenders will approve you the same
day you apply, within 24 hours, or within a few business days. Once approved,
you’ll receive a loan agreement to review and sign.
- Accept the agreement: If the loan agreement looks good to
you and you agree to the terms and fine print, sign it to accept the offer. You
can expect the lender to distribute the funds shortly after.
Other Personal Loan Fees to Consider
In addition to origination fees, you may want to be on the
lookout for these other common personal loan fees.
- Late payment fees: Lenders might charge late payment fees if
you fail to make your payment on your due date.
- Prepayment penalty fees: Prepayment penalty fees are
designed to penalize you for paying off your loan early.
- Insufficient funds fees: If there's not enough money in your
bank account to cover a loan payment, you may be on the hook for a returned
- Application fees: Application fees are usually nonrefundable
and intended to cover the cost of processing loan applications.
- Paper copy fees: If you request a physical copy of the loan
agreement, you may have to pay a paper copy fee.
- Annual fees: Sometimes, lenders tack annual fees onto loan
schedules to offset the costs of maintaining your account.
Have Good Credit? Consider No Origination Fee Loans
If you have solid credit, you may want to apply for a
personal loan with no origination fee. However, if your credit isn’t in the
best shape or you’re unsure of whether you’ll qualify, you may want to avoid no
origination fee loans as these might come with higher rates that make your loan
In some cases, a loan with an origination fee may actually
be the better choice. This is when the combined interest and origination costs
are lower than the interest rate of a no origination fee loan. Do your research
and calculations to find the best option for your situation.