Getting a personal loan without an origination fee can save you money and lower your APR, but finding one isn’t always easy, especially if you have fair or bad credit.
Origination fees are deducted upfront from the loan amount, reducing how much you receive, and can range up to 12%, depending on the lender. However, some personal loan lenders don’t charge origination fees, like LightStream — which is our top pick for no-origination-fee loan lenders.
Read on to learn which lenders don’t charge origination fees, how origination fees work, and how to avoid them.
Why trust Credible
Best personal loans with no origination fees
Best overall
LightStream
4.9
Credible Rating
Pros and cons
More details
Best for optional origination fees
SoFi
4.8
Credible Rating
Pros and cons
More details
Discover - Best no-fee loans
Discover personal loans have low APRs, repayment terms up to seven years, no origination fees, nationwide availability, and doesn't require your Social Security number to prequalify on its site. You'll need to have an annual income of at least $40,000, and a FICO score 660 or higher, to be eligible. If your credit score is fair or poor, you'll need to go elsewhere, as Discover doesn't allow cosigners.
Funds are available as soon as the next business day after loan approval.
PenFed - Best credit union
PenFed is a credit union that offers personal loans to applicants with good credit. Though you'll need to become a member to receive a loan, membership is open to everyone. PenFed shines with no origination fees, small available loan amounts, and low interest rates. If you don't have a FICO score above 700, you may not qualify on your own, but can apply with a cosigner with good credit — which is not something most lenders offer.
PenFed doesn't have a minimum income amount, and offers live chat and an entirely online loan application process.
Citi - Best for current customers
Citi offers no-fee personal loans to borrowers with very good credit. No-fee means no origination fees and no late fees, and Citi is one of very few lenders that don’t charge either. (Origination fees are deducted from the loan upfront, reducing the amount you receive).
Though Citi requires a relatively high credit score to qualify, its minimum income requirement is low. The company also offers a generous 0.50 percentage point autopay discount and makes same day funding available to current Citi customers. Plus, it has a low maximum APR — personal loan rates top out at 20.49% APR.
Methodology
Credible evaluated the best personal loan lenders with no origination fees based primarily on whether they charge an origination fee and the extent of any fees charged, as well as rates and terms, customer experience, eligibility, available loan amounts, discounts, minimum credit score, and income requirements. We also considered each lender’s approval rates, average interest rates, average FICO scores, average loan amounts, and approved loan purposes based on Credible proprietary data.
Credible’s team of experts gathered information from lender websites, customer service departments, in-house resources, and via email support. Each data point was verified to make sure it was accurate at the time of publication.
Learn more in our personal loans lender rating methodology.
What is a loan origination fee?
A loan origination fee is an upfront fee that some lenders charge when you get a personal loan. Even if a lender may charge an origination fee, that doesn’t mean that it will. If you have good or very good credit, you’re more likely not to be charged an origination fee compared to someone with fair or bad credit.
Origination fees vary between lenders and are not a set amount. Lenders assess your risk level and may charge an origination fee accordingly. However, origination fees generally range from less than 1% of the loan amount to 12%, depending on the lender.
Tip
The origination fee is typically deducted upfront from the loan amount. For example, if you get a $10,000 loan with a 5% origination fee, you’d receive $9,500 while still owing the full $10,000.
How do personal loan origination fees work?
Lenders determine whether to charge an origination fee and how much based on your credit score, the loan amount, and your repayment term, among other factors. The fee is often a percentage of the loan amount, but it could be a flat rate as well. In most cases, any origination fee is charged upfront, thereby reducing the amount of money you receive.
Importantly, an origination fee does not reduce your loan amount — you’ll still owe the full amount you borrowed, even though you won’t receive that full amount.
Expert insight: How to compensate for the origination fee
To compensate for the origination fee — so you’ll receive the amount you actually want to borrow — you’ll need to do a little math.
Estimate
Add the amount of the origination fee to the amount you want to receive. For instance, if you need $10,000 but the loan has a 5% origination fee, add $500 to $10,000. In this case, you’d borrow $10,500. This isn’t perfect, though. You’ll still come up a little short because 5% of $10,500 is $525, so you’d only get $9,975.
Exact
To get the exact amount, divide the amount of money you need by 1 minus the origination fee (expressed as a decimal). If you need $10,000 but are charged a 5% origination fee, it would look like this:
- $10,000/(1 - 0.05) = $10,000/0.95
- $10,000/0.95 = $10,526.32
Check the math by multiplying 5% times the loan amount you arrived at and subtracting the origination fee:
- $10,526.32 x 0.05 = $526.32
- $10,526.32 - $526.32 = $10,000
— Meredith Mangan, Senior Personal Loans Editor, Credible
Why do lenders charge origination fees?
Lenders charge origination fees to offset the risk of lending to borrowers with lower credit scores and to offset the costs of evaluating applications, processing paperwork, and managing loans. Most lenders charge origination fees, but if you have very good credit, they may not charge you one.
And you can choose to do business with a lender that doesn’t charge origination fees at all. That said, no-origination-fee lenders may have higher minimum credit score requirements than lenders that do charge origination fees.
Other personal loan fees and charges
- Late payment fees: If you miss a payment due date, you could be charged a late fee.
- Returned payment fees: Even if you make your payment on time, a fee may be applied if your payment is returned due to non-sufficient funds. This may also be called a non-sufficient funds, or NSF, fee.
- Prepayment penalty: This is rarely charged by personal loan lenders (Credible doesn’t work with a single partner lender that charges one). But it would be assessed if you pay off your loan early, or before the repayment period officially ends.
How to avoid personal loan origination fees
To avoid a personal loan origination fee, select a lender that doesn’t charge one. Or, prequalify and compare personal loan quotes between lenders — choose a lender that doesn’t expect to charge you one.
- Choose a lender without origination fees: Some banks, credit unions, and online lenders offer personal loans with no origination fee.
- Improve your credit score: A higher credit score may help you qualify for loans with fewer fees and better terms.
- Compare multiple lenders: Prequalify to compare loan estimates from multiple lenders. These aren’t offers of credit but can give you an idea of which lenders are less likely to charge an origination fee or which might charge a low fee.
- Negotiate with lenders: Some lenders may be willing to waive this fee, especially if you have strong credit and/or an existing relationship with the lender.
Tips on keeping personal loan costs low
- Choose a shorter repayment term: When given the options between repayment terms, choose the shortest one with a payment you can afford. This will keep your overall interest costs down.
- Make extra payments: Pay more than the minimum due each month to potentially pay the loan off faster and reduce interest.
- Avoid unnecessary fees: Read the loan terms carefully to see which penalties or additional charges the lender may assess and how to avoid them.
- Look for lender discounts: Some lenders offer rate reductions for autopay or if you request that the lender pay off your creditors directly with the proceeds from a debt consolidation loan.
FAQ
What is a good origination fee for a personal loan?
Open
Where can I get a personal loan with no origination fee?
Open
Can you get a no-origination-fee loan with bad credit?
Open
