The whole story, as text
How much do I need to borrow to receive $10,000 after a 5% fee?
You need $10,000. The fee comes out first. A 5% origination fee is deducted from the loan before the money reaches you. Apply for $10,000 and you receive $9,500. To end up with the full $10,000, what must the note say?
The answer
$10,526. Not $10,500. The fee is charged on the whole note, including the part that pays the fee: $526.32.
Why
Divide what you need by one minus the fee. $526 fee, $10,000 cash in hand. $10,000 ÷ 0.95 = $10,526.32. Five percent of $10,500 is $525, which would leave you $25 short. At 12% over 36 months: $350 a month. Cost of borrowing $2,586: $526 fee and $2,060 interest.
One move
Compare offers on cash in hand, not on the note. 12% + 5% fee: $350 a month, $2,586 cost of borrowing. 14%, no fee: $342 a month, $2,304 cost of borrowing. Same $10,000 in hand. The no-fee loan costs $283 less. Estimated APR 15.61% with the fee, 14% without. The APR brings certain fees, such as this one, into the rate.
If the fee is added to the balance instead of deducted, you receive what you asked for and the note is bigger by the fee; the tool handles both.
Yours
Which offer really costs less? runs these numbers for any loan. Nothing you enter leaves your browser.
The longer read
You need $10,000.00 in your account. The lender charges a 5% origination fee and takes it out of the loan before sending the money. If you apply for $10,000.00, you receive $9,500.00. To end up with the full amount you have to borrow more, and you pay interest on the fee too.
The short answer
Divide the cash you need by one minus the fee rate. For a 5% fee that is $10,000.00 ÷ 0.95, which is $10,526.32. The note says $10,526.32, the fee is $526.32, and $10,000.00 reaches you.
It is not $10,500.00. Five percent of $10,500.00 is $525.00, which would leave you $9,975.00, short by $25. The fee applies to the whole amount on the note, including the part that pays the fee.
A worked example
Borrowing $10,526.32 at 12% over 36 months:
- Monthly payment: $349.62
- Total of all payments: $12,586.48
- Cost of borrowing (payments minus the $10,000.00 you received): $2,586.48, of which $526.32 is the fee and $2,060.16 is interest.
Compare that with a loan at 14% and no fee for the same $10,000.00: the payment is $341.78, and the cost of borrowing is $2,303.95. The fee-free loan at the higher rate is cheaper by $282.53. That is why offers have to be compared on the same cash in hand, not on the amount printed on the note.
Two ways lenders handle a fee
- Deducted from proceeds. You receive less than the note. Gross up as above.
- Added to the balance. You receive the full amount and the balance starts higher by the fee. The arithmetic is the same: the fee is borrowed and earns interest either way.
Either way, the estimated APR brings the fee into the rate. In the example, the 12% loan with the fee has an estimated APR of 15.61%, against 14.00% for the fee-free loan.
Questions to ask your lender
- Is the origination fee deducted from what I receive, or added to my balance?
- If I need exactly $10,000.00 in hand, what amount should the note be for?
- What is the APR on this loan, including the fee?
- Is any part of the fee refunded if I pay the loan off early?
See it with your own numbers
Enter the cash you need and each offer’s rate, term and fee in Which offer really costs less?. It grosses up every offer to the same cash in hand and compares them on total cost and on cost if you pay off early.
Related: Equal-cash comparison and estimated APR. Glossary: net proceeds, origination fee.
Educational tool, not advice. Your lender’s disclosures are the authoritative figures.
Written and reviewed by Riverbend Crossroads Digital LLC, Sunday, September 6, 2026. Figures from the Show Real Cost engine, computed exactly and shown to the cent. Educational, not advice; your lender's disclosures are the authoritative figures. How we calculate · Corrections.