Private Student Loan Fees

Any type of loan that you get is going to have fees that come with it, and private student loans are no different than the rest. When you are getting a student loan, you want to be as careful as you can about having a lot of extra fees, because you are already paying for the base interest rate, which can be kind of high as well. There is one main fee that just about any private loan from any bank or financial lender has, and this is the origination fee. This is a one-time charge to your account, whereas the interest rate is a continual payment throughout the whole year. The origination fee is based on the borrowing amount of your loan. You have the choice of subtracting it from the total amount of your loan, or you can just add it on top of the total amount. There are, however, some instances when you can get a zero fee loan. The only problem with that is that you have to have a credit score of eight hundred or more to be able to qualify.

The amount of the origination fee will vary depending upon if the loan was made in the prime market or the subprime market, which is usually between 0.5% to 2% of the borrowing loan amount. For example, an origination fee of 0.5% on a $20,000 loan is $100, and if the fee is 2% on that same loan amount, then you will pay $400. The subprime market is usually the higher of the two, and it is very risky for both the borrower and the lender to use this percentage due to the combination of high interest rates. Just be careful and find out which market your origination fee is based on before you decide to sign for a loan.