What are personal loan Origination fees

There is a personal loan origination fee that is not known to many people, so let us know about this expense in a little detail. Personal loan origination fees which is likewise known as processing, administrative or underwriting fees are credited by banks and lenders when you avail out a personal loan. They cover everything from processing an application form to verifying the applicant’s various eligibility criteria to covering other costs for the bank’s or lender’s loan operations. Sometimes it’s a fixed charge and other times it’s a certain percentage of your total loan amount which can be between 1% to 6%, and sometimes it can go as high as 8%.

Now let us discuss further about how Origination Fees can be determined? 

1) There are a few factors to determine the applicant origination fee. Your credit score is counted as one of them. If you don’t have a great credit score, lenders or banks may charge a higher origination fee to reduce their risk percentage if the applicant doesn't repay the loan amount. Considering, if you have a credit score of say 800—which is considered very good, the bank or lender might only charge an origination fee of 1% of your total loan amount; whereas someone with a little less credit score of 650 might be charged 5% for the same personal loan amount.

2) Your personal loan amount impacts your origination fee as well. With an increase in your loan size, the origination fee that you pay becomes larger, no matter how much percentage is charged. Your income and other financial debts, like home loan and mortgage payments, could also impact your origination fee. Because these fees depend on a combination of a lot of factors, origination fees vary from different banks and lenders, although some of the banks and lenders charge a flat rate of interest.

3) Next, let us discuss the Personal Loan Origination Fee Costs and some points relating to that. Origination fees usually lie between 1% to 8% of the total amount of loan and can cover a number of other costs, such as application fees, credit check fees and loan processing fees. However, the total origination fee on your personal loan depends on a number of factors such as your credit score and the loan amount.

4) Origination fees also can vary from different banks and lenders; there is no set fee on how much each one of these banks and lenders charges. Because each creditor has a different set of terms and conditions, in the same way each borrower has different needs, the amount you pay may be different from what someone else pays. Likewise, your bank or lender may want you to pay the fee in one of several ways. Usually, these costs are subtracted from your total loan amount or added on to the loan amount left. Another important point is that not every lender charges origination fees. If you don’t have a very good credit score and are not able to qualify for a personal loan at a bank or lender that does not charge origination fees, you may need to opt for a bank or lender who does. It depends on your needs for funds and your credit history. You can get an Instant Personal Loan by following all the terms and conditions that banks and lenders ask for.

5) These are some of the important points that you need to keep in check when you avail a personal loan from a bank or lender that charges origination fees from you. You can always check your HDFC Personal loan interest rate by checking their website to get a fair idea about the evaluation and sanctioning of your application for personal loan. This makes your loan process very simple and easier as you get to know about the steps before the time only.

Also Read:- Can A Personal Loan of Rs 10 lakh obtained easily