Application Fees for Consumer Loans: Everything You Need to Know

When you take out a consumer loan, your bank may charge you an application fee in addition to interest and insurance. This fee compensates the bank for reviewing and processing your loan application. 

Fees proportional to the amount borrowed

Application fees are generally proportional to the amount borrowed. A recent study found that of the 102 banks charging this type of fee, 101 set the fee at this rate. Most often, application fees are set at 1% of the loan amount, or even 1.50% in some cases. This proportionality stems from the fact that the cost of application fees is factored into the annual percentage rate (APR), which cannot exceed usury limits.

Perception Thresholds

Application fees are not entirely proportional. Banks generally set minimum and maximum fees, below and above which they do not go, regardless of the loan amount. Minimum fees range from €30 to €120, while maximum fees can be as high as €750. On average, minimum fees are around €70 and maximum fees are €340.

Proportionally higher fees on small amounts 

The way processing fees are calculated means that the fees charged on small loans are, proportionally, higher than those on large loans. For example, for a personal loan of 5,000 euros, the average processing fee is 65 euros, or 1.3% of the amount borrowed, compared to 0.98% if the fees had been entirely proportional.

These banks that offer application fees

Some banks are exceptions and do not charge application fees. Of the 124 banks surveyed, only 6 clearly state that they do not charge application fees, including 4 online banks, one private bank, and one regional bank. Two other banks offer this fee waiver only for loans under €4,500 or for applications submitted online.