Best Personal Loans With No Origination Fees in March 2024
Updated: April 16, 2024
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When applying for a personal loan, it’s essential to consider the fees charged by each prospective lender. One of these is the origination fee, a one-time payment imposed by the lender for processing your loan. Not all lenders charge this fee. While you may pay less in upfront closing expenses with a no-origination-fee personal loan, it could mean paying more in interest over the life of the loan.
Best Personal Loans With No Origination Fees for 2024
Personal loan origination fees are one-time charges you may have to pay when taking out a loan. These fees are usually around 1%–8% of the original loan amount and cover the cost of processing your loan. Online lenders are more likely to levy origination fees than direct lenders, such as banks and credit unions.
To help you find the best personal loans with no origination fees, MoneyGeek reviewed over 30 personal loan lenders using 35+ individual data points across five key categories. The factors we assessed include APR ranges, available loan amounts, minimum credit scores, application fees and disbursement times. We also considered customer satisfaction, overall experience quality and business ratings.
MoneyGeek’s Top Pick for No-Origination-Fee Loans: LightStream
MoneyGeek’s Runner-Up: Discover
Personal Loan Options for Those Who Want No or Low Origination Fees
Where to Start: Choosing the Best No-Origination-Fee Personal Loan
Personal loans can be a cost-effective alternative to getting a credit card, allowing you to fund major expenditures like relocation, home improvement, debt consolidation, big purchases and vacations while saving money on interest. However, it’s crucial that you only take out a loan you can pay back without accumulating too much interest.
Considering factors like your credit score, income and current debt is a crucial first step. With these in mind, you can choose the best lender, loan amount and repayment terms for your specific needs and situation. MoneyGeek outlined other key steps you can take to select the right lender and loan for you.
Ask Yourself the Important Questions
It can be difficult to parse through all the factors involved in getting a personal loan. That’s why we suggest you take a step back and ask yourself the following questions to get your bases covered:
- How much do you need in funds? Depending on what you need the loan for, you might need more than $50,000 or even $100,000. It’s important to find lenders that can fulfill the amount you need.
- What’s your credit score? This information can be a limiting factor because each lender has its own minimum credit score requirements. If feasible, determine if you can save more in the long run if you decide to improve your credit standing and then apply for a loan from a lender with a high credit requirement.
- Can you afford the monthly payment? Make sure to include your current debt, bills and other expenses when calculating your ability to pay monthly. Missing a single payment can hurt your credit score significantly.
- How much debt do you already have? Evaluate if you can afford to add another monthly payment to your current debt. If you already have a considerable amount owed in your account, your FICO score might suffer a drop if you take out another loan.
Do Your Research
Don't underestimate the power of data collection; bear in mind that you'll be responsible for repayment for at least two to six years. Make a point of researching topics that could have a long-term influence on you. For example, you might wish to avoid lenders who do a thorough credit check because your credit score may suffer as a result. The same goes for lenders that place restrictions on how you may utilize your loan; in this case, it’s crucial that you double-check that you can use the money for the purpose you intended.
MoneyGeek's guide is full of valuable information and suggestions for the best lenders for various scenarios, but our recommendations aren't perfect. You may benefit from looking into something we didn't cover. By conducting your own research, you can find additional suitable lenders for your needs.
Wait
Once you've gathered all of the facts you'll need, take a deep breath. Waiting a day or two before revisiting the prospect of taking out a loan allows you to think about it more rationally. A personal loan is a significant financial investment that can take years to pay off. Because of its long-term impact, carefully evaluating if taking out a personal loan is the best choice for you is essential.
Read the Fine Print
Once you've decided on a lender, review possible fees, including origination fees, prepayment penalties and late fees. Paying attention to these seemingly small details can potentially save you a significant amount of money in the long run.
Apply
After going through these steps, the only thing left to do is apply for your loan. Be sure only to apply once you've chosen a lender you feel comfortable with and thoroughly understand the application conditions.
At this point, the lender may request specific documents and information from you, including identification, proof of income and evidence of residency. Some lenders will allow you to apply online. However, if you can, calling or visiting the lender is also a useful alternative, especially if you have questions.
Calculate Your Monthly Payment
The typical loan repayment period often spans several years. Knowing your future monthly payment can help you determine how well you’ll be able to pay your new loan off, given your current financial situation. It can also help you decide if you need to adjust some loan parameters, like payment terms and loan amount.
Frequently Asked Questions About No-Origination-Fee Loans
Your personal needs, along with other factors — such as credit, loan amount and payback periods — determine the best personal loan lender for you. MoneyGeek compiled some of the most frequently asked questions about loans with no origination fees to help you choose a loan and lender.
An origination fee is an upfront fee charged by the lender as compensation for processing a borrower's loan application. Typically, this fee is used to offset the expenses of a new borrower's underwriting and verification. It's generally around 0.5% to 1% of the original loan amount, but some lenders may charge as high as 8%. Not all lenders charge these fees, and many that do are open to negotiable arrangements.
If you choose a lender that charges origination fees and you want them waived, many lenders are open to negotiations. Origination fees are internal charges, so lenders have the authority to make changes to terms related to them. If you have a high credit score or a significant down payment, they're more likely to waive these fees since you're considered less likely to default on your loan. Waiving this feel can, however, translate to paying a higher interest rate over the life of the loan.
A personal loan can hurt your credit score in a few ways. For example, missing a payment has a significant impact on your credit. If your lender conducts a hard credit inquiry during the approval process, that can also affect your credit score. Additionally, taking on more debt can negatively impact your FICO Score.
To reiterate, there are bigger factors that affect the APR of your personal loans, but lenders offering no origination fees may actually just be rolling that cost into the principal; in this case, the origination fee is added to the interest of the loan. According to the Federal Reserve, the national average interest rate as of the last quarter of 2021 was 9.09%.
A personal loan’s interest rate depends on several factors such as credit score, income and repayment period. Origination fees could potentially increase your interest rate if none is charged upfront because lenders may want to make up for the cost of processing your loan. A fair interest rate varies depending on your credit score; it’s typically between 6%–9% for individuals with fair to good credit scores.
Methodology
We reviewed over 30 personal loan lenders using 35+ individual data points across five key categories: loan affordability, accessibility, consumer friendliness, customer service, flexibility and lender transparency.
We considered several individual data points that we feel carry the most weight when choosing a personal loan lender within each ranking criteria category. These factors include APR ranges, available loan amount, minimum credit score, minimum income amount, application fees and disbursement time.
Here at MoneyGeek, we value you — the consumer — so we also factor in lenders’ customer support, business ratings and additional features that could make your experience easier and more accessible – like prequalification, payment options and mobile apps.
After careful consideration and calculation, our picks are decided and chosen with your best interest in mind. Our personal loan recommendations and expert tips can help you make the best decision when choosing a lender that meets your needs.
sources
- Federal Reserve. "Consumer Credit – G.19." Accessed March 15, 2022.
The content on this page is accurate as of the posting/last updated date; however, some of the rates mentioned may have changed. We recommend visiting the lender's website for the most up-to-date information available.
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