When borrowing money, there are always a lot of forms, documents, and fine print. Aside from the actual money you borrow, and the interest you pay on that, there are also other charges and fees along the way. Origination fees are becoming more common for personal loans.
An origination fee is usually .5 to 1% of the value of the loan, and it is paid up front instead of being absorbed into the overall cost of the loan. In other words, its the money you pay to get the money you need.
Are they standard for all loans? Is there a way to get around paying origination fees?
Reason for the Fee
Origination fees have long been standard for mortgages, and complex long-term loans. Due to all the paperwork, copying, and filing, not to mention the underwriting and inspections, the lender needs a way to get some money up front to cover the cost of the work.
Think about it, not every borrower repays their loan. This fee makes sure the lender covers their costs up front, regardless of how the loan works out.
So from their perspective it makes sense. That doesn’t mean that paying 1% of the loan right away is any easier for the borrower.
These days it isn’t just mortgage brokers charging these fees. More and more personal lenders and banks are charging origination fees for all of their loans.
Do All Lenders Charge Origination Fees?
The good news is that most lenders, including National Small Loan, don’t charge you extra for doing business with them. The up-front costs are paid by the lender.
These fees need to be explained beforehand. In other words, you should never be surprised by an origination fee, the lender will tell you about it, and how much it will be.
National Small Loan has no hidden fees or charges. Every single penny you have to pay is detailed up front, along with a comprehensive repayment schedule so there is never any confusion.