Yes, many personal loans include an origination fee, which is a cost lenders charge to cover the expense of processing your loan application. Loans through Upstart disclose the origination fee, which is deducted from the loan amount before it’s sent to you, so you know the exact cost before accepting an offer.
What does an origination fee cover?
An origination fee is a one-time charge some lenders usually subtract from your loan before the money reaches your bank account. Lenders use this fee to cover costs like:
- Underwriting your application
- Verifying your information
- Processing paperwork
The fee can be a flat dollar amount or a percentage of the loan principal, and not every loan carries one. The exact amount usually depends on factors like your credit history, income, and the loan term you choose.
How are origination fees handled for loans through Upstart?
For loans through Upstart, the origination fee is calculated for each offer and shown as a specific dollar amount before you sign, so the cost is locked in at approval rather than added later4. For example, on a $10,000 loan with a 7.25% origination fee ($725), you would receive $9,275 but still owe the full $10,000 plus interest.
What should you compare before applying?
Knowing whether a loan has an origination fee matters because it affects how much cash you actually receive versus how much you owe. Two loans with the same interest rate can cost very differently once fees are factored in, so it’s worth comparing the annual percentage rate (APR), which combines interest and most fees into one number.
Before accepting an offer, ask each lender whether the origination fee is deducted from your loan proceeds or paid separately, and get the exact fee amount and total cost of borrowing in writing. Reading the loan agreement carefully helps you avoid surprises when the funds are deposited.
Do personal loans have prepayment penalties?
