Quick answer
An origination fee is a charge for processing a loan, and the CFPB lists it among the fees often added to personal installment loans. It may be deducted from the money you receive or added to the amount you borrow. Either way it raises the APR and total cost, so compare offers by APR and total cost, not just the interest rate.
Two loans with the same interest rate can cost very different amounts. The origination fee is often why.
How origination fees work
The CFPB lists common personal installment loan fees, including origination fees, documentation fees, optional credit or disability insurance, and late fees. An origination fee is usually handled one of two ways:
| Method | What happens |
|---|---|
| Deducted from proceeds | You borrow $10,000 but receive less, and repay the full $10,000 plus interest |
| Added to the loan | The fee is rolled into the balance, so you borrow and pay interest on more |
Worked example
You need $10,000 at 11.99% for 36 months. One loan has no fee; the other has a 5% fee, so you borrow about $10,526 to net $10,000.
| No fee | 5% origination fee | |
|---|---|---|
| Amount borrowed | $10,000 | about $10,526 |
| Monthly payment | about $332.10 | about $349.57 |
| Interest + fee | about $1,955 | about $2,585 |
| Effective APR | 11.99% | about 15.59% |
Arithmetic illustration, not an offer. The fee adds about $629 to the cost.
How to compare
- Compare APR, which includes certain fees, rather than the interest rate alone.
- Compare total cost over the same term. Use the loan comparison calculator.
- Check whether the fee is deducted or added, so you borrow enough to cover your need.
- Turn a rate and fee into an APR with the APR calculator.
Want to compare real offers? Use the form on this page to see whether partner lenders may have an installment loan for you, with APRs on our network from 5.99% to 35.99%, or call (800) 236-7761.
Examples are illustrations, not offers. Approval, APR and terms depend on the lender, your state and your credit profile.
Frequently asked questions about loan origination fees: what they are and how they cost
What is an origination fee on a personal loan?
A fee the lender charges to process and fund your loan. Your loan disclosure shows the amount.
Is the origination fee included in the APR?
The APR is designed to include certain fees as well as interest, which is why an offer with a fee usually has an APR above its interest rate. Check the Truth in Lending disclosure.
Can I avoid an origination fee?
Some lenders do not charge one. Compare offers by APR and total cost, since a no-fee loan with a higher rate can still cost more.
Is the fee taken out of my loan?
It depends on the lender. Some deduct it from the amount you receive, so you get less than you borrowed; others add it to the loan balance.
Sources
- CFPB: Do personal installment loans have fees? (accessed 2026-10-09)
- CFPB: What is the difference between a loan interest rate and the APR? (accessed 2026-10-09)
- CFPB: Regulation Z (Truth in Lending), 12 CFR Part 1026 (accessed 2026-10-09)
Last updated 2026-10-09. How we research and update pages.