15+ personal loan fees explained | Costs and how to avoid them

Personal loan fees explained

Learn exactly what those charges are so that you can potentially avoid unnecessary costs.

There’s a fee for just about everything when it comes to personal finance — and personal loans are no exception. When fees are ongoing, they can tack hundreds of dollars on to the cost of your loan. And more to owe isn’t what you want when you’re borrowing money.

You likely won’t be able to avoid all personal fees, but you might be able to minimize what you end up paying in the long run. Here’s what to look for, what you can negotiate and how to ultimately save on your personal loan.

What do you want to read about first?

Jump to fees associated with…

Opening your loan

After you’ve gotten a handle on your credit score and eligibility, your first step to borrowing is applying with a lender or broker. Keep an eye out for these potential fees as you move toward signing on the dotted line.

Application fee

An application fee typically combines the costs of processing, document preparation and review a bank or lender takes on. It’s a catch-all term for the cost of putting together a loan on your behalf.

Personal loans tend to come with a lower application fee than you’ll see with a mortgage, but the highest fee we’ve seen out there is around $100. You typically pay this fee at the time of application, and it’s nonrefundable — even if you’re denied the loan.

  • Application fees are fairly uncommon among personal lenders. If you find one that charges this fee, you could potentially negotiate it down. This is especially true if the fee includes a particularly high commission.

Brokerage fee

If you choose to bypass a direct lender for a broker or service that connects you with multiple loan offers, you might pay a fee for the convenience. Brokerage fees can arise when a broker isn’t making a commission or isn’t paid by lenders to be a part of its network.

Many services that connect you to lenders are free. If you’re charged a fee, it’s typically a flat fee that you pay only after you’ve applied or accepted a specific loan agreement.

  • Apply directly with a lender to avoid this fee. Or find a broker that doesn’t charge the borrower for its services.

Closing fee

A closing fee generally includes a lender’s commission, a brokerage fee and other associated application costs. While this term is typically associated with real estate, you’ll find a few personal lenders that charge it.

Your closing fee can be rolled into the monthly cost of your loan or taken out of the amount you’re ultimately funded. Either way, you’re looking at no more than a couple hundred dollars.

  • It’s possible to find lenders that don’t charge closing fees. If yours does, you might be able to negotiate this fee.

Commitment fee

If you apply for a loan that you aren’t immediately funding, you might face an extra commitment cost. Generally, this fee is intended to make up any interest the lender could be charging you on the funded amount.

A commitment fee can be either a flat fee or a fixed percentage of the amount taken out of your disbursed loan amount.

  • Avoid this fee by funding your loan right away, rather than delaying disbursement. If you don’t need the money right away, consider applying when you’re ready.

Document preparation fee

Your lender might charge a fee to defray the costs of drafting documents related to processing your loan. This includes the application, your specific terms and any other closing forms.

This fee is generally a flat $100 or so that’s taken out of the amount of your loan.

  • You may be able to find providers that don’t charge a document preparation fee, if you want to avoid it.

Processing fee

Similar to document preparation and application fees, processing fees are typically charged by lenders to cover the cost of credit checks and underwriting.

Processing fees are typically a flat fee taken out of the amount of your loan. You can expect to pay an amount equal to what you’d pay for prep and app fees: around $100.

  • Many lenders don’t charge a processing fee. But if yours does, the fee is likely unavoidable. Still, it’s worth trying to negotiate it down.

Paper copy fee

Online lenders sometimes charge borrowers a fee if they request a physical copy of the loan agreement for their records. It’s also an option for borrowers who are uncomfortable using e-signatures on official documents.

If you request paper backup for your documents, you’ll typically pay a fixed $10 per copy.

  • Easily avoid this fee by forgoing a paper copy of your documentation with an online lender or borrowing from a brick-and-mortar lender like a credit union or a bank. Note that even if you’re provided your documents electronically, you can often save them as PDFs and print them out at home.

Underwriting fee

Personal loan underwriters are the people who assess the level of risk a bank or other lender is potentially taking on with a specific borrower. Underwriting fees are designed to cover the cost of that assessment.

You’ll usually see this fee rolled into other fees that include origination, processing or document preparation. It’s generally a flat amount of no more than $100 that comes out of your total funded amount.

  • Not all lenders charge an underwriting fee. Those who do charge this fee may be willing to negotiate it down.

Ready to apply? Compare personal loans now

Releasing your funds

The more crucial part of the process is why you’ve applied with a lender in the first place: to get the money you need to plan life’s next adventure, consolidate your debt or get over a financial hump. Here’s what to look out for when it’s time for a lender to disburse your funds.

Credit insurance fee

You may be offered credit insurance when you take out a personal loan. This insurance allows you to file a claim to cover payments you might’ve missed due to unexpected personal tragedy or hardship.

Credit insurance is typically a monthly payment of a few dollars that’s added to your typical repayment amount.

  • It’s not necessary to add credit insurance to your loan. If a lender insists that it’s mandatory or tries to include it deceptively, that’s illegal.

Origination fee

Also known as a disbursement or establishment fee, an origination fee can be rolled into the monthly cost of your loan or simply taken out of the amount you’re funded. It’s designed to cover the costs associated with your application process in its entirety.

This fee is typically assessed as a percentage of your loan amount ranging up to 8%.

If your personal loan provider charges an origination fee, it’s likely they’ll deduct it from the amount you’re ultimately disbursed. Say you’re looking to borrow $10,000 through a loan that comes with a 2% origination fee. That $200 fee is deducted from your $10,000 loan amount, resulting in $9,800 disbursed for your needs. Some lenders may be able to tack the fee onto your loan amount instead of deducting it. If you need the exact amount you’re apply for and can’t afford to receive less, check with your lender to see if adding the origination fee to the loan amount is an option.

  • Not all lenders charge an origination fee. If yours does, you might not be able to get out of it. Still it’s worth a try.

Repaying your loan

Even when you’re finally on the path to repayments, it doesn’t mean you’re free of fees. You could be asked to offset the costs associated with specific payment types and the consequences of late or missed payments.

Check handling fee

Also called a check processing fee, this fee offsets the cost of your lender having to deal with physical checks. If a lender charges this fee, they typically charge a fee on each check you submit.

Most check fees are around $5, which can add up quickly if you’re paying by check every month.

  • Make repayments by other means if a lender charges a check handling fee. You can usually pay electronically through autopay or direct payments.

Collection agency recovery fee

If you default on your loan, your lender may call on the services of a collection agency to get the payments they’re owed. Many pass along any fees associated with this service to you.

If your lender requires you to cover the costs of hiring a collection agency, you could pay a flat fee or a percentage of the repayment in question. Collection agency recovery fees are generally steep, reaching hundreds of dollars.

  • If you’re worried about missing payments, contact a loan representative with your provider. Your lender may be willing to work out different terms to get you through rough finances.

Dishonored payment fee

If your repayment doesn’t go through or is returned for insufficient funds, you’ll likely pay a dishonored payment fee. These fees are more typically called nonsufficient funds (NSF), failed payment or returned payment fees.

NSF fees can run $15 or more and are often added to the amount due.

  • To avoid this fee, confirm that you have the funds available in your account when you’re making a payment. If your payment history is otherwise spotless, call your lender to explain your situation — they might be willing to waive the fee.

Electronic payment processing fee

Though a less common fee, you could face an electronic payment processing fee if your lender enforces strict repayment terms. This fee is designed to offset the cost of one-time electronic payments, including payments made by wire transfer.

You’ll usually end up paying an extra $5 for each payment made this way.

  • It’s easy to find lenders that don’t charge this fee. If your lender does, ask if they’re willing to waive it with automatic payments from your bank account.

Late payment fee

Many lenders charge a fee when your repayment is received past its due date, though some lenders offer a grace period before applying any late charges.

Late payment fees are added on to the delinquent amount as a percentage of the amount due or a flat fee, depending on your lender. The percentage generally runs around 5% of your repayment, with flat fees around $15. Sometimes lenders charge the greater or lesser of a percentage or flat fee.

  • Enrolling in automatic payments can help you avoid this fee. If you don’t think you’ll be able to make a payment on time, call your lender as soon as possible. You may be able to work out a plan to avoid any late fees, especially if your repayment history is good.

Payment convenience fee

With some lenders, paying by debit or credit card — rather than through direct payments via ACH — can trigger a payment convenience fee. This fee is usually assessed per transaction and added to the typical cost of your repayment.

  • If your terms and conditions indicate that ACH payments are required, you’ll need to follow suit with your repayments or pay this charge.

Prepayment fee

It can be exhilarating to find yourself able to put more toward your principal or even pay off your loan before it’s fully due. But you’ll want to be sure that your lender doesn’t charge a prepayment fee, also called an exit fee. This fee is intended to cover the interest that your lender would have collected over the lifetime of your loan, essentially guaranteeing the full cost of your loan.

Prepayment fees come in both flat fees and percentages, depending on your lender, and can be steep — sometimes hundreds of dollars, depending on the amount you’re paying off.

  • If your contract includes a stipulation against prepayments, simply holding off on extra repayments can help you avoid this fee. But many lenders don’t charge it, which means you might be able to find one matching your needs without worrying about this fee.

Administrative fees

The reality is that lenders can tack on just about any type of fee by explaining it’s intended to cover the costs of maintaining your loan.

Annual fees

You might see an annual fee tacked onto your loan schedule — often a flat $100 or more added to your account once a year. This fee is designed to take the costs of maintaining your account off of your lender.

  • Not all lenders charge annual fees, so it’s easy enough to find a loan without it. If yours does, an annual fee is among those long-term costs you can try to negotiate — especially if you’re paying other forms of admin fees.

Other ongoing administration fees

Administration fees come by many different names: loan service fees, ongoing monthly fees, online connection fees and more.

Like an annual fee, these miscellaneous fees effectively reimburse your lender the costs for maintaining your loan. But the “ongoing” implies a monthly fee tacked on to your regular repayments, representing either a percentage of your loan or a flat fee. Paying one or more of these fees each month can put a dent in the amount of your payment that actually goes toward your principal.

  • Carefully read the fee structures that come with your loan to determine just how many you might be paying to your lender. Many of these fees are simply the costs of doing business passed on to you. Call your lender to see if you can negotiate any of them — or even drop one altogether.

Compare personal loans from top lenders

Rates last updated February 23rd, 2018

Reveal your potential loan offers and rates

Answer two quick questions to filter the loan offers and get the best one for you.

Let's get started

Select your credit score range

I don't know my credit score

Finally, select where you live.

To get your credit score:

Experian logo

Experian is a leading provider of personal and business credit reporting. Find out your FICO score now for less than the cost of a cup of coffee.

Unfortunately, none of the personal loan providers offer loans for that credit score. If you are in urgent need of a small loan, you might want to consider a short term loan.
Name Product Product Description Min. Credit Score Max. Loan Amount APR
Even Financial Personal Loans
Get connected to competitive loan offers instantly from top online consumer lenders.
From 4.99% (fixed)
LendingClub Personal Loan
A peer-to-peer lender offering fair rates based on your credit score.
From 5.99% (fixed)
CompareFirst Personal Loans
An easy-to-use loan connection service geared toward introducing first-time borrowers to affordable personal loans.
From 2.99% (fixed)
Upgrade Personal Loans*
From 5.96% (fixed)
Laurel Road Personal Loans
Get a personal loan with no application or origination fees and a rate discount for autopay.
From 5.5% (fixed)
FreedomPlus Personal Loans
Consolidate debt and more with these low-interest loans. Cosigners welcome.
From 4.99% (fixed)
Best Egg Personal Loans
From 5.99% (fixed)
Borrow only what you need for debt consolidation, home improvements and more — with APRs based on overall creditworthiness.
From 5.99% (fixed)
LendingPoint Personal Loans
Get a personal loan with reasonable rates even if you have a fair credit score in the 600s.
From 15.49% (fixed)
NetCredit Personal Loan
Check eligibility in minutes and get a personalized quote without affecting your credit score.
From 34% (fixed)

Compare up to 4 providers

Bottom line

Personal loans can come fees that are unavoidable. But that doesn’t mean you have to accept all of them that come your way when borrowing from a lender.

Even small penalty fees can add hundreds of dollars to the cost of your loan. Look for a lender that charges minimal fees — or none at all. If you’re charged a fee for a loan you’ve already taken out, contact your lender and see if it can be waived or reduced.

When you’re ready to begin comparing your options, read our reviews of lenders and products to find one that fits exactly what you need.

Frequently asked questions

Rhys Subitch

Rhys Subitch is a content creator and editor for finder.com. They specialize in updating information on various pages to keep everything accurate for the readers, and enjoy the time they get to spend researching various topics because of it. Rhys lives with their cat and partner in Seattle. When not working they enjoy working on sewing and other craft projects.

Was this content helpful to you? No  Yes

Ask an Expert

You are about to post a question on finder.com:

  • Do not enter personal information (eg. surname, phone number, bank details) as your question will be made public
  • finder.com is a financial comparison and information service, not a bank or product provider
  • We cannot provide you with personal advice or recommendations
  • Your answer might already be waiting – check previous questions below to see if yours has already been asked

Finder only provides general advice and factual information, so consider your own circumstances, or seek advice before you decide to act on our content. By submitting a question, you're accepting our Terms and Conditions and Privacy Policy.

US Personal Loans Offers

Important Information*
Even Financial Personal Loans

Get connected to competitive loan offers instantly from top online consumer lenders.


Borrow only what you need for debt consolidation, home improvements and more — with APRs based on overall creditworthiness.

LendingClub Personal Loan

A peer-to-peer lender offering fair rates based on your credit score.

SoFi Personal Loan Fixed Rate (with Autopay)

Borrow up to $100,000 with a competitive APR and no fees.

Go to site