Most lenders require some type of application fee, but they’re usually not expensive. Fees can range between $25 to $50 and some banks, like Citizen’s Bank, have no fee at all. You should also discuss fees with your lender before applying to see if you can get them waived.
After you apply and are approved for a loan, there are a few other fees you will need to look out for.
First is the origination fee, which is charged right after you are approved for your loan. This fee can be 1 to 6% of your total loan amount depending on your lender. So, for example, if you borrow $5,000 and your origination fee is 3%, your fee will be $150.
To avoid an origination fee, look into lenders that do no charge one, like American Express or SoFi. There are plenty of lenders out there that charge little to nothing for this fee, so be sure to keep your eyes peeled.
This is one that everyone is familiar with and it’s pretty inescapable. Almost no lender is free from having some sort of late fee. The only major lender without a late fee is Marcus and Goldman Sachs, but they may increase your interest instead depending on how late your payment is.
Most fees are somewhere between $20 and $50, and some lenders charge a percentage based on the amount you have left to repay.
Okay, this fee is a little hard to understand but it does exist. If you pay back your lender in full before the end of your loan period, you may be charged a prepayment fee.
You would think it would be better to pay back your loan earlier, but that is not the case for all lenders. On average, lenders with a prepayment penalty will charge you 2 to 5% of the total loan amount for paying them back too early.
Not all lenders have a prepayment penalty in place, but some do so be sure to keep an eye out for them if you plan to pay back your loans ahead of time.