Closing Costs
Also known as: loan closing fees, settlement costs
Fees paid at or before the disbursement of a loan. For personal loans, the primary closing cost is the origination fee (1%-8% of loan amount), often deducted from the loan proceeds. Most online personal loans have no closing costs beyond the origination fee, though some lenders also charge application fees.
Full definition
Closing costs is a term more commonly associated with mortgage loans, where they can total 2%-5% of the purchase price. For personal loans, the concept is simpler: the fees are usually either origination fees deducted from proceeds or none at all. Personal loan fee types: Origination fee: Charged by many lenders (1%-8%), this is deducted from the loan amount at disbursement. On a $10,000 loan with a 5% origination fee, you receive $9,500 but owe $10,000. The fee is included in the APR calculation. Some lenders (LightStream, SoFi, Marcus) charge no origination fee. Application fee: Relatively uncommon for online personal loans. Some credit unions charge $25-$50 as a processing fee. This fee is charged at application, not at disbursement. Document processing fee: Occasionally charged by lenders for document review. Usually $10-$50. Insurance products: Some lenders offer (or formerly required) credit insurance, payment protection insurance, or GAP-style products. These are almost never required and add significant cost when included. Always decline unless you have specifically researched the product. No-fee lenders: LightStream (Truist), SoFi, Marcus (Goldman Sachs), and Discover all market themselves as zero-fee personal loan lenders. They make their money on the interest rate alone. These lenders are worth comparing even if their advertised rates seem slightly higher, because the lack of origination fee reduces effective APR.
- Written by
- Get Advance Loan Editorial Team
- Reviewed by
- Compliance Review
- Published
- January 15, 2026
- Last reviewed
- June 15, 2026
- APR (Annual Percentage Rate)APR is the yearly cost of borrowing, expressed as a percentage of the loan amount. It includes interest plus most lender fees, so it's a more complete measure of cost than the interest rate alone.
- Interest rateThe interest rate is the percentage of the loan balance charged per year as interest, excluding fees. It is a component of, but smaller than, the APR.
- Fixed interest rateA fixed rate stays the same for the entire life of the loan, so the monthly payment never changes. Most U.S. personal loans are fixed-rate.
- Variable interest rateA variable rate can change over the life of the loan, usually tied to an index like the prime rate. Monthly payment can rise or fall.
- Prime rateThe prime rate is the benchmark interest rate U.S. banks publish for their most creditworthy commercial customers. Many consumer rates are quoted as prime + a margin.
- Loan termThe loan term is how long you have to repay the loan, usually expressed in months. Common personal-loan terms are 24, 36, 48, 60, and 72 months.
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