When applying for personal loans online, you will want to reduce the costs as much as possible. The starting point is to reduce or eliminate origination fees. Here are some tips that can help you have your origination fees reduced, or even waived.
Most mortgage brokers, banks and other lenders will charge you some fee for offering a loan to you. This is the loan origination fee and it varies from lender to lender. The fee is usually meant to cover for the cost of services like loan application processing and underwriting. Origination fees add to your closing costs can increase your amount due by an additional $2,000 to $3,000. Of course, the additional amount depends on how much you borrow.
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Avoid Origination Fees With Personal Loans Online
Use Your Customer Loyalty
If you’ve been a long-time customer of a credit union or a bank, you can use this to your advantage. Lenders want loyal customers to be happy, and the fact that you’ve been with them for a long time can give them a reason to reduce or waive fees.
Banks also like having as many accounts as possible, so if you tell them you are considering taking your account elsewhere, they may give you friendly loan terms in order to keep your account.
Shop For Lenders
When shopping for the best personal loans online, it’s advisable to get more than one estimate. That way, you’ll be able to compare what different lenders have to offer. Getting different loan estimates can help you get a lower origination fee.
Another advantage is that when your lenders know you’re shopping around, they will likely offer you better deals. Get offers from at least three lenders to give you something to compare and get the advantage of having different lenders competing for your business. Making many lenders compete for your business will result in your origination fee going down.
Note that lenders are always ready to modify the loan terms for the packages they offer, but you need to show them they are not the only option. If you have succeeded in getting a lender who has offered not to charge you the origination fee, then you can let other lenders know you can get better terms elsewhere.
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Take a No Closing Cost Loan
“No closing cost” loans are worth looking into, but before you go for it, you need to ask a lot of questions. When you take out a no closing cost loan, you won’t pay any upfront fees, but as a result of this you’ll likely have to pay a higher interest rate.
Furthermore, going for this type of loan doesn’t mean you won’t have to pay anything at closing. It only means you will not pay the lender fee, but you’ll still have to pay for a credit check, appraisal, title search, title insurance, and other charges.
Before you go for a no closing cost loan, ask the lender to give you an honest estimate of all the fees charged. Lenders usually offer low fees but make up the difference by charging higher interest rates. Ensure everything is clear from the word go. Look at these three parts carefully: points (loan closing costs), fees, and interest rate.
It is good to pay low fees but only for a short-term loan. If you want a longer-term loan, it is better to have a low interest rate. In that case, paying high fees can be more prudent.
Negotiate Terms
Most of the lender fees are negotiable, the loan origination fee included. After getting an estimate of all the loan fees, ask the lender to explain to you any fees you do not understand. There are some fees that have several costs bundled together as one fee.
Once you have all the explanations, you can start your negotiation from an informed point of view. Lenders are looking for clients, and they will not let you go easily without coming up with terms that are agreeable to both sides. You may even have some of these fees waived.
Bottom Line
It isn’t bad to pay a loan origination fee, but by having it reduced or waived, you can save some cash, which can go a long way into funding your projects. As you shop for lenders, look at all the loan aspects that attract fees, including the origination fees.
This process can take longer but it is worth it because it will ensure that you pay the least possible amount of fees. Finally, having a good credit rating can also give you a bargaining boost. If you aren’t entirely comfortable with how to get personal loans online, then it’s better to seek the help of an expert.
