A withheld origination fee reduces cash received. To receive $10,000 after a 5% fee calculated on gross principal, the modeled loan must be $10,526.32, not $10,500. At a hypothetical 12% annual note rate over 36 months, that larger balance has a $349.62 payment. Compare net cash, interest, fees and total repayment together; these are invented examples, not offers.
What changes when every example supplies the same $10,000?
The comparison below fixes cash available at $10,000, the annual note interest rate at 12%, and the term at 36 equal monthly periods. Only the withheld fee changes. Gross principal is 10000/(1-fee fraction). Interest is charged on that gross balance; total financing cost equals interest plus the financed fee. The last two columns show different quantities: all repayments versus repayments less the cash received.
| Withheld fee | Gross principal | Fee within principal | Monthly payment | Interest on principal | Total repayment | Repayment less net cash |
|---|---|---|---|---|---|---|
| 0% | $10,000.00 | $0.00 | $332.14 | $1,957.15 | $11,957.15 | $1,957.15 |
| 3% | $10,309.28 | $309.28 | $342.42 | $2,017.68 | $12,326.96 | $2,326.96 |
| 5% | $10,526.32 | $526.32 | $349.62 | $2,060.16 | $12,586.48 | $2,586.48 |
| 8% | $10,869.57 | $869.57 | $361.03 | $2,127.34 | $12,996.90 | $2,996.90 |
The hypothetical rates and fees are sensitivity inputs, not typical charges or current market averages. No other fees, daily-accrual differences, missed payments or prepayment are modeled. Calculate at full precision and round only for display; an actual final installment can differ.
What estimated APR does each fee produce?
The existing equal-cash examples above all use a 12% note rate, but the fee-inclusive annualized cost rises as the withheld fee increases. The table below keeps the same $10,000 cash received and 36 payments. It adds an estimated APR instead of treating the note rate as the complete borrowing price.
| Withheld fee | Note rate | Estimated APR | Payment | Repayment less cash received |
|---|---|---|---|---|
| 0% | 12.00% | 12.00% | $332.14 | $1,957.15 |
| 3% | 12.00% | 14.13% | $342.42 | $2,326.96 |
| 5% | 12.00% | 15.61% | $349.62 | $2,586.48 |
| 8% | 12.00% | 17.90% | $361.03 | $2,996.90 |
BYL solves 10000 = sum(M/(1+i)^k), k=1..36 for monthly rate i, using each scenario’s unrounded payment M. Estimated APR is i*12*100; it is not the compounded effective annual yield. The CFPB’s Regulation Z Appendix J explains the actuarial framework and unit periods. These examples assume one advance, a first payment exactly one monthly period later, equal monthly periods, and no other charges. Odd first periods, actual dates, additional finance charges or lender rounding can change a disclosed APR. This illustration is not a lender disclosure or a compliance determination.
To check the 5% row in the existing APR estimator, use $10,000 as the amount financed for this assumed cash flow, $349.62 as the rounded monthly payment, and 36 months. A rounded input can produce a slightly different last digit. Do not enter the $10,526.32 gross note balance as net cash in that check, and do not add the withheld fee to the repayment total again.
Where does each payment go, and can you reproduce the result?
For the 5% withheld-fee scenario, the note starts at $10,526.32, the borrower receives $10,000, and interest accrues at the assumed 12% note rate. Each modeled payment first covers that month’s interest; the remainder reduces principal. The fee is already reflected in the larger starting balance.
| Year | Payments | Interest | Principal repaid | Ending balance |
|---|---|---|---|---|
| 1 | $4,195.49 | $1,096.38 | $3,099.11 | $7,427.20 |
| 2 | $4,195.49 | $703.34 | $3,492.16 | $3,935.05 |
| 3 | $4,195.49 | $260.44 | $3,935.05 | $0.00 |
Download all 36 modeled payments as CSV or download the assumptions, fee scenarios and full-precision calculations as JSON. Both files use model version November 6, 2026. Figures are hypothetical BYL calculations; the sources explain concepts and do not supply the model’s rates or fees. Displayed rows round independently to cents, so row sums can differ slightly from full-precision totals. The CSV is not an actual lender’s cent-rounded repayment schedule.
When reading an offer, locate the amount financed, finance charge, APR, payment schedule and total of payments. Regulation Z section 1026.18 describes these closed-end-credit disclosure terms. Compare the actual written disclosures and dates; do not replace them with this illustration. BorrowYourLoan is operated by Infusion Tech and is a commercial connection service, not a lender.
Does a lower note rate overcome the fee?
At the same $10,000 net cash and 36-month term, a 15% no-fee example repays $12,479.52. A 12% note-rate example can have a withheld fee up to approximately 4.19% of gross principal before its modeled scheduled repayments equal that amount. The boundary is a calculation under these inputs, not a recommendation to accept that fee.
To reproduce it, first calculate repayment at 12% with no fee as T12 and at 15% with no fee as T15. Equal-cash principal increases by 1/(1-f), so T12/(1-f)=T15 and f=1-T12/T15. Actual APR, term, timing and fee treatment can change which written offer costs less. Use the written-offer comparison, not a note-rate headline alone.
How does paying a fee separately change the record?
If a fee is paid from savings instead of withheld or financed, record that separate cash payment once and keep the cash timing visible. A $10,000 note with a separately paid $500 fee supplies $10,000 from the lender but requires $500 from the borrower. It is a different starting cash position from receiving $10,000 with the fee financed. Do not add that upfront cash to a model that already includes the same charge in principal.
Review whether the fee is a percentage of gross principal, a fixed charge, refundable under any contract condition, withheld, financed, or paid separately. The CFPB identifies possible installment-loan fees and recommends checking the required disclosures. It does not establish that a particular fee or refund rule applies to your contract.
How much cash remains after an origination fee?
If a hypothetical 5% fee is deducted from a $10,000 loan, the fee is $500 and the cash received is $9,500. The scheduled loan balance may still be $10,000. A fee may instead be financed or paid separately, so read the specific disclosure.
| Fee assumption | Fee dollars | Cash received if deducted |
|---|---|---|
| 0% | $0.00 | $10,000.00 |
| 3% | $300.00 | $9,700.00 |
| 5% | $500.00 | $9,500.00 |
| 8% | $800.00 | $9,200.00 |
What balance would deliver $10,000 after a 5% deduction?
Ignoring other costs, divide the desired cash by one minus the fee rate: $10,000 ÷ 0.95 = $10,526.32. This is arithmetic, not a recommendation to increase a request or a promise that the amount is available. A larger balance can raise payments and interest.
Is an origination fee the same as paying a stranger upfront?
No. A disclosed fee in an actual loan agreement is different from someone demanding a gift card, wire, or payment to guarantee approval. Review the provider and written terms before proceeding. See the FTC’s advance-fee loan warnings.
How should fees affect your comparison?
Compare the amount financed, net proceeds, APR, scheduled payments, and whether any fee is refundable or deducted. Do not compare two loans solely by their advertised balance.
Source: CFPB explanation of interest rate and APR. BYL dollar examples are independently calculated illustrations, not rates quoted by that source.
Sources supporting this explanation
- CFPB: possible personal-installment-loan fees and the need to review actual disclosures
- CFPB: interest rate and APR measure different aspects of credit cost
- CFPB: Closed-end disclosure terminology, not legal certification of this model
- CFPB: Actuarial APR and unit-period framework; BYL is a simplified regular-month illustration
Sources checked 2026-11-06. Examples are hypothetical BYL calculations or planning worksheets;they are not observed lender prices,offers or approval criteria.