How to avoid a personal loan origination fee 

But a little strategy can lower (or eliminate) this fee altogether. Here’s what you need to know about personal loan origination fees and how to avoid them.

What is a personal loan origination fee?

A personal loan origination fee is an expense some lenders charge upon opening a loan. It sometimes goes by other names, such as administrative fees, financing fees, or processing fees.

Here’s how an origination fee works: The lender will calculate a percentage of your loan amount and charge you upfront. There are two ways a lender may implement an origination fee:

• Deducting from your loan amount: Your origination fee will be instantly repaid from your loan sum. In other words, if you take out a $30,000 loan and your origination fee was $1,000, you’d only receive a $29,000 deposit into your account—but you’d still have to repay $30,000.
• Adding to your loan amount: Your origination fee will be tacked onto your total loan amount. With the same loan scenario as above, you’d receive a $30,000 deposit but you would owe $31,000.

These fees supposedly exist to cover the costs associated with opening a loan, such as underwriting, credit checks, etc. But not all lenders charge this fee.

How much are personal loan origination fees?

Origination fees are often between 1% and 10% of your loan amount. Some lenders may charge even more. That means a $10,000 loan subject to an origination fee could result in between $100 and $1,000 in fees. That’s a big price tag for the privilege of borrowing money—before interest even enters the equation.

How to avoid a personal loan origination fee

There are a few simple ways to either eliminate or lower the origination fee you pay for a personal loan.

Be selective with the lender you choose

Again, not all lenders slap you with an origination fee. If you can help it, choose a financial institution that waives this charge.

If for some reason you prefer to deal with a lender that charges origination fees (perhaps those are the only loans you prequalify for), it’s smart to shop around and see how much the proposed fee will be. Banks must tell you the fee before the loan closes. All else being equal, open your account with the lowest origination fee.

Boost your creditworthiness

One factor that lenders consider when assigning your specific origination fee is your credit score. Riskier borrowers may be subject to a higher origination fee. If your credit is less-than-stellar at the moment, concentrate on making on-time payments, lowering your credit utilization, and continuing to build a lengthy history of responsible credit use.

Your debt-to-income ratio is another element of your profile that lenders focus on to decide if you can afford another installment. It indicates the amount of your monthly income currently dedicated to repaying other debts. A DTI below 40% is ideal.

Reduce your loan amount

If you request less money, your origination fee will almost certainly reduce, as well. Even if the actual percentage stays the same, your out-of-pocket will be lower.

Increase your term length

It’s possible that your lender may charge less for loans that have longer terms. The shorter the repayment period, the less interest you’ll pay the bank.

Should you ever open a personal loan with an origination fee?

There’s certainly nothing redeeming about a loan origination fee. But that doesn’t mean you should completely ignore lenders who charge it.

For example, the most favorable loan terms may unfortunately come from a lender that charges an origination fee. If the APR is so low that you’ll ultimately save money despite the origination fee, the loan is worth opening. Or, if you can only qualify for realistic monthly installments from a lengthy repayment term by paying an origination fee, the loan may be worth opening.

Other personal loan fees to watch for

Besides origination fees, there are a few other personal loan costs to watch out for:

• Late fees: If you fail to make at least the monthly payment by your due date, you’ll typically get dinged with late fees. This can also result in a damaged credit score if you don’t bring your account current within 30 days or so.
• Early payoff penalties: Some lenders are in the mean-spirited habit of penalizing you for paying off your loan early. It’s a way for them to compensate themselves for not making the maximum interest from your loan.
• Application fees: Additional to an origination fee is the rare application fee. This charge is meant to cover costs associated with processing your application. Some lenders charge it even if you aren’t approved for the loan.

Early payoff penalties and application fees in particular aren’t the norm, so you shouldn’t have trouble avoiding them.

Editor’s Picks: Best personal loans with no origination fee

Lender details checked Jan. 15, 2026

The takeaway

To avoid a personal loan origination fee, you can simply look for a lender that doesn’t charge these fees. If you find that the most appealing loan terms for your situation are tied to an account with an origination fee, there may be things you can do to lower the cost. Try improving your credit score, lowering your debt-to-income ratio, reducing your loan amount, or increasing your loan term. You may even consider asking the lender to lower your origination fee, though there’s no guarantee they’ll be willing to consider that.

Frequently asked questions