There are usually a number of fees that come with your average loan, and it is important that you are familiar with them. These fees can make up a substantial amount of what you end up paying by the end. The origination fee is very common with personal loans, and this article will explain everything you need to know. When you take the time to get this information, you will be in a much better position as a borrower.
What is an Origination Fee?
An origination fee on a loan is meant to compensate your lender for the cost of processing the initial application. This fee can make up anywhere from one to eight percent of the principal loan amount. While some lenders don’t charge an origination fee, many of them do. While it is not a huge concern if you are only borrowing £100, it can be much more significant with larger amounts.
When You Pay
The cost of the origination fee is typically rolled into the loan, so you will essentially pay it when the full amount is due. Some lenders require you to pay this fee upfront after your application has been approved and you sign the loan agreement.
It is a good idea to see if you can pay this fee with your credit card upfront so no interest is tacked on. If you allow the fee to be rolled in with the rest of the loan, it will come with interest. This is a good way to save a little bit of money on your loan. You can actually save a fairly significant amount by doing this.
Pay Off Your Loan Quickly
If the origination fee is rolled into the bad credit loan, you will need to pay off everything you owe as quickly as possible. This will keep the total amount that you have to pay to a minimum. If you are paying it in instalments, you should try to pay as much as possible each time. This will reduce the overall amount of interest you pay on your loan.
When you are going about applying for a loan online, you should make a point of comparing how much each lender charges. You should be able to find out how much this fee is on the lender’s website. This can help you save some money, so it is highly recommended that you do it. The lender will most likely have a percentage of the loan listed as the origination fee. This gives you a clear idea as to how much it is going to be for your loan.
Make sure that you also find out about any other fees that each lender charges before deciding on a certain one to borrow from. If you want to save as much money as possible on your loan, you’ll definitely want to do this. The fact of the matter is that some lenders charge more than others when it comes to these fees. If you cannot find this information on the lender’s site, you should contact them directly. Any reputable lender will be able to provide you with this information upon request.
Getting the Fee Waived
There is always a chance that you can get the origination fee waived entirely. Sometimes all it takes is a simple polite request over the phone or via email. It is always better to get on the phone with an actual person when you try to do this. The lender will be more inclined to waive the fee if you are borrowing a large sum of money. This is something that you will want to try regardless of however much you plan to borrow though.
Review the Loan Agreement
You want to make a point of looking over the final loan agreement as well. Before you sign this document, you need to know the terms, including any fees. The amount of the origination fee (if there is one) will be included in this agreement. Make sure that you confirm the amount and that you are okay with all of the terms. This is a good way to avoid any regrets later on, which can really come back to bite you.
An origination fee can be a pain, but there is usually way to get around it. If you must pay this fee, make sure that you don’t spend any more than you have to. This can mean everything from trying to negotiate with the lender to comparing fees. You need to do your research and find a lender that can provide you with a fair deal. Choosing the first lender you come across will likely mean paying more than necessary. Make sure that you keep all of these things in mind when trying to obtain a loan online.