When you’ve decided to take out a personal loan, there’s a lot more to consider than how much you’d like to borrow and what you could end up paying in interest.
You’re also going to want to look at fees that could pop up and increase the cost of your loan.
To help you get started, we’ve highlighted a few fees to look into before you jump in and sign your loan documents.
Simply put, this is a fee for processing your loan application.
It can be pretty easy to find lenders who don’t tack on origination fees, but those that do charge them tend to charge between 1% and 8% of the loan.
There are two ways an origination fee could alter your loan:
But bypassing lenders who charge an origination fee may not always be your best option.
As NerdWallet pointed out, there are instances where choosing the loan with an origination fee could be the better move.
For example, if you’re choosing between loans with origination fees versus loans without, you can level the field by comparing APRs because they include the interest rate and upfront fees, if any. In this case, you’d consider the lower APR a win, but This. Should. Not. be the end of your research, because not every fee is rolled into the APR.
To estimate the true cost of your loan you’re also going to want to look at other fees that could cost you.
A late payment fee is exactly what it says – it’s a fee you incur when you pay late or when you don’t pay in full – and it could end up burning you in a few ways:
But this just part of the pain of paying late: you’re also paying interest on the payment you missed and your next payment could cost you more.
If your repayment plan includes paper checks it could cost you a couple dollars every month. So the first math you’ll want to do is to multiply the number of payments and the check-processing fee to see how this may add up.
If your check shows up late, you could end up swallowing a check payment processing fee plus a late payment fee.
Lenders may be picky about how you repay them.
For example, they could charge you a processing fee if you don’t sign up for automatic payments. Like a check-processing fee, this would be added to every loan payment you make. If you don’t see your preferred payment method called out, it could be worth contacting your potential lender and asking if there’s a fee. It’s one thing for a lender to say they won’t charge a fee for ACH payments, but you should also double-check that they wouldn’t charge for wire transfers.
If you don’t have enough funds in your account – in the analogue days known as bouncing a check – your lender may tack on a fee, aka a returned-check fee. If you pay by check, this could be a boomerang of sorts since you could end up paying for the check-processing fee in addition to the fee for not having the money to back up the check.
This article is for informational purposes only and is not a substitute for individualized professional advice. Articles on this site were commissioned and approved by Marcus by Goldman Sachs®, but may not reflect the institutional opinions of The Goldman Sachs Group, Inc., Goldman Sachs Bank USA or any of their affiliates, subsidiaries or divisions.