How does origination fees impact my final interest rate on a personal loan?


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  • Official comment
    Stilt Team (Edited )

    The origination fee does not change the interest rate on your loan (so your monthly payments don't change) but it increases the APR of your loan. Depending on the lender, some may deduct the origination fees from the principal disbursed while others may add it to the interest. In both cases, it increases the APR. 

    The reason lenders add origination fees to the APR is because they spend time and money in underwriting the loan. As a part of origination, they spend money on advertising, they need to pull credit reports, have people verify documents, provide customer support, etc. All of these costs add up and as a result, increase the expenses of online lenders. That's why lenders charge origination fees to make up for these costs and eventually earn a profit.

    If they are doing their job right, they should be spending less money in overall origination than they are charging you as a borrower. The spread helps them make a profit.

    At Stilt, we believe lenders should try to charge as low of an origination fee as possible and improve their internal operations. We charge zero to low origination fees and always try to provide the best experience possible to customers. These would help lower the interest rates for the borrower and improve the quality of borrower experience.

    Feel free to reach out to us at if you have further questions.

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