Transparent method
The formula
Worked example
Example inputs
How to interpret the result
An origination fee reduces the actual cash received without reducing the balance being repaid, so the loan's true cost is higher than its stated rate alone suggests. A fee-heavy loan and a fee-light loan at the identical stated rate are not actually equivalent offers once the money that never arrived gets factored in.
Before you rely on it
What to check
Compare loans using net proceeds received and effective APR together, not the stated interest rate on its own.
The common error
Where people go wrong with loan origination fee calculator
Comparing two loan offers by rate alone while ignoring origination fees. A lower-rate loan with a heavy origination fee can cost more in real terms than a slightly higher-rate loan with little or no fee.
Sensitivity evidence
How loan amount changes the origination fee
| Loan amount | Origination fee | Net loan proceeds | Interest plus fee |
|---|---|---|---|
| $20,000 | $1,000 | $19,000 | $6,496 |
| $22,500 | $1,125 | $21,375 | $7,309 |
| $25,000worked example | $1,250 | $23,750 | $8,121 |
| $27,500 | $1,375 | $26,125 | $8,933 |
| $30,000 | $1,500 | $28,500 | $9,745 |
Every input, tested
Which input moves the origination fee most
| Input | Tested from | To | Origination fee at each end | Swing |
|---|---|---|---|---|
| Origination-fee rate | 4.0% | 6.0% | $1,000 to $1,500 | $500 (40%) |
| Loan amount | $22,500 | $27,500 | $1,125 to $1,375 | $250 (20%) |
| Annual interest rate | 8.0% | 12.0% | $1,250 to $1,250 | none |
| Loan term | 4.0 years | 6.0 years | $1,250 to $1,250 | none |
Two variables at once
Origination fee by loan amount and origination-fee rate
| Loan amount \ Origination-fee rate | 3.0% | 5.0% | 7.0% |
|---|---|---|---|
| $20,000 | $600 | $1,000 | $1,400 |
| $22,500 | $675 | $1,125 | $1,575 |
| $25,000 | $750 | $1,250 | $1,750 |
| $27,500 | $825 | $1,375 | $1,925 |
| $30,000 | $900 | $1,500 | $2,100 |
Step by step
The worked example, input by input
| Input | Value used |
|---|---|
| Loan amount | $25,000 |
| Origination-fee rate | 5.0% |
| Annual interest rate | 10.0% |
| Loan term | 5.0 years |
| Origination fee | $1,250 |
| Net loan proceeds | $23,750 |
| Interest plus fee | $8,121 |
Where the inputs come from
Enter the loan amount you are applying for, the origination fee as a percentage from the lender's disclosure, the note rate and the term. Fees commonly run from about 1% to 8% or more on personal loans and are usually deducted from proceeds, so the money reaching your account is less than the loan amount. For mortgages, origination charges appear on the Loan Estimate, page two, under origination charges.
When the result stops applying
The fee is a cost on day one and is not refundable if you pay the loan off early, so a loan you plan to repay quickly is penalized more. Some lenders offer to finance the fee inside the balance, which charges interest on it. Fees on government-backed programs may follow different rules.
What to compare it with
Compare fee structures by looking at the amount you receive and the total you repay. A loan with a 5% fee and a 10% rate is not comparable to a no-fee loan at 12% until you calculate both. The APR calculator does that in one step. Ask whether the fee is negotiable or waived for autopay or existing customers, and check whether a credit union has a lower fee. If you need a specific amount of cash, borrow enough that net proceeds cover it.
People also ask
Frequently asked questions
Is an origination fee negotiable?
Sometimes. Lenders compete on fees, so asking for a reduction, mentioning a competing offer or applying with a credit union can lower it, especially with strong credit.
Is the fee included in APR?
Yes. Origination fees are finance charges and are part of the APR, which is why APR exceeds the note rate.
Do I get the fee back if I repay early?
Generally no. The origination fee pays the lender for making the loan, so it is not prorated or refunded if you repay early. That is why a loan you expect to pay off quickly is hurt more by a large fee than one held to term.