When you apply for a personal loan, you will have to pay for many different fee and charges. Knowing about them will give you a true idea of the cost of obtaining the loan, thereby allowing you to plan your application better. Below, we list out the eight fees that you must know about when applying for a personal loan.
- Application Fee
When you apply for a loan, you will be charged an application fee that can go up to $100 and more. Usually, personal loans will have a lesser application fee as compared to mortgage. And such fees are usually non-refundable. So, even if the lender denies your application, you will not be paid back the fee. But on the upside, you can probably lower the fees in case you have good negotiation skills. Check out https://www.credible.com/ in case you are looking for a trustworthy loan provider.
- Document Preparation Fee
In order to process your loan request, the lender will have to draft the necessary documents like application form, closing forms, and such. Usually, an amount of around $100 is charged as document preparation fee. But there are lenders who will not charge you any such fee. So, make sure to ask about this beforehand so as to avoid being swindled off the fee by any middleman.
- Processing Fee
In order to meet the costs of underwriting and credit checks, the lenders will typically charge you with a processing fee. And this too will be around $100 just as the application fee and the document preparation fee. The fee can be avoided or at least brought down with some smart negotiating.
- Brokerage Fee
Sometimes, you may not be able to get in touch with a lender directly for any loan and may need the services of a brokerage for this. And in case the broker is not receiving any commission from the lender, then you will likely be charged a fee for their services. The amount of fee you are charged will vary based on the broker you are dealing with. But it is usually charged at a flat rate rather than as a percentage of the loan. So, make sure to talk with the broker and know about the brokerage fee before you hire them to get you a loan.
- Origination Fee
An origination fee will cover the cost of the entire application process and is typically charged at up to 8% of the loan amount. For example, if you are applying for a loan of $10,000 and the origination fee is charged at 5%, then the final amount that will be disbursed to you will be $9,500. Now, if you need to receive the exact loan amount that you are applying for, then be sure to discuss it with the lender and they should be able to add up the origination fee to the loan amount.
- Closing Fee
The closing fee is not something that is charged by personal lenders. Instead, it will be charged to you by the real estate agent and will include the brokerage fee, the commission of the lender, and so on. If you don’t have the funds to pay the closing fee, you can easily allow the fee to be deducted from the loan amount. Alternatively, it can also be added to the monthly loan cost. And remember to bargain this one too.
- Dishonored Payment Fee
Sometimes, you might make a payment on time but it can get returned from the bank due to insufficient funds. And for many lenders, this is a big inconvenience since they will have to wait longer to receive your payment and will have to go through the entire payment process once again. As such, lenders might charge you a dishonored payment fee for these types of non-payments. Usually, around $15 is charged as dishonored payment fee, which is added to the installment that is due to be paid.
- Late Payment Fee
You will also be required to pay a fee every time you are late at paying the monthly repayment amount. However, many lenders will offer you a few days as a grace period before charging the late payment fees. You should expect about 5% of the repayment amount to be charged as a late payment. And if you wish to avoid this, the best way is to sign yourself up for an automatic payment service so that your loan repayments are always made on time every month.