Overview

When you take out a loan, there may be various fees associated with processing, managing, and repaying your loan. Understanding these fees can help you plan ahead and avoid unexpected costs.

Common Types of Loan Fees or Charges

While specific fees depend on the lender and loan type, here are some common fees you may encounter:

Origination Fee (Certain Loan Types)

• A one-time fee charged when the loan is issued.

• Typically deducted from the loan proceeds before funds are disbursed.

• Helps cover the cost of processing and underwriting your loan.

Late Payment Fee

• Charged if you fail to make a payment by the due date.

• The amount may depend on a percentage of the overdue payment or a flat fee, according to your loan terms.

• Can be avoided by making timely payments or setting up automatic payments.

ACH or Check Return Fee

• Assessed if a payment via bank transfer (ACH) or check is returned due to insufficient funds.

• Each failed attempt to collect a payment may result in an additional fee.

How Fees Are Calculated

• Fixed Fees: Some fees, such as returned payment fees, are set at a predetermined dollar amount.

• Percentage-Based Fees: Others, such as origination or late fees, may be based on a percentage of your loan amount or overdue balance.

• Recurring vs. One-Time: Some fees occur once (e.g., origination fees), while others can be assessed multiple times (e.g., late payment fees).

Minimizing Loan Fees

To reduce or avoid fees, consider the following:

• Review Your Loan Agreement: Make sure you understand which fees apply to your loan.

• Set Up Automatic Payments: This helps ensure on-time payments and can prevent late fees.

• Maintain Sufficient Funds: Avoid ACH return fees by ensuring you have enough funds in your account when payments are due.

Next Steps

Before accepting a loan, review all applicable fees to understand the full cost of borrowing. If you have any questions, contact customer support for clarification.

📌 Related Articles:

• How Loan Repayment Works
• Late Payments: What Happens and How to Avoid Them
• Making Additional or One-Time Loan Payments