Online loan fees: main types
The daily interest rate is not the only figure you should look at before taking out an online loan. The cost may include loan fees and other mandatory payments that increase the total amount to be repaid.
Depending on the terms of a specific MFI, the cost of a loan may include:
- Loan origination fee — charged when the loan is issued, meaning that you receive the loan funds after this amount has already been deducted.
- Servicing fee — may be charged throughout the entire term of the agreement.
- Extension fee — may apply if the parties agree to extend the loan term.
- Other additional payments — fees for individual services if they are provided for by the terms of the agreement.
Main types of MFI fees
| Fee | When it is charged | Typical amount |
|---|---|---|
| Loan origination fee | When the loan is issued | Up to 10–15% of the loan amount, and in some offers — up to 30% |
| Servicing fee | During the loan term | Up to 15%, usually charged for each billing period |
| Extension fee | If an extension of the loan term is agreed | 3–10%, depending on the extension period |
| Service and other fees | For individual services provided for by the agreement | A fixed amount that varies by MFI |
Why it is important to look at APR, not just the rate
By law, the maximum daily interest rate may not exceed 1% (Article 8, Part 5 of Law No. 1734-VIII). The percentage may seem small, but the daily rate does not show the actual cost of the loan because it does not include mandatory payments.
As a result, two offers with the same advertised rate may have different final costs. For example, one MFI may have no fees, while another may charge a servicing fee. With the same rate, the second loan will ultimately cost more.
Therefore, you should pay attention to the APR — the annual percentage rate. It helps you see the cost of the loan including all applicable expenses.
Which payments an MFI is not allowed to charge
A consumer is not required to make payments that are not specified in the loan agreement (Article 12, Part 6 of the Law “On Consumer Lending”).
If, after taking out a loan, you are asked to make hidden payments that are not included in the agreement or were not properly disclosed, you may file a complaint with the National Bank of Ukraine.
How to avoid overpaying fees (loan origination, servicing, etc.)
- Review the Consumer Credit Passport. The lender must provide you with a document containing information about the full cost of the loan before the agreement is concluded (Article 9 of Law No. 1734-VIII).
- Review all fees and other mandatory payments. Check whether there is an origination, servicing, or extension fee, or an insurance payment.
- Compare APRs. This indicator gives a more complete picture of the cost of the loan than the advertised rate.
Final summary
Fees can have a noticeable impact on the total cost of an online loan. Therefore, looking only at the daily interest rate is not enough — before taking out a loan, check the APR and all mandatory payments.
Important to know: This article is for informational purposes only and does not constitute financial or legal advice.