What Do Lenders Charge for Arrangement Fees?
Arrangement fees in the secured loan market typically range from £150 at the lower end to £999 at the higher end, though some specialist products outside the mainstream range carry higher fees. Lenders with more competitive interest rates tend to charge higher arrangement fees as part of the deal — the fee effectively subsidises the rate, allowing the lender to advertise a headline APR that attracts borrowers while recovering some margin upfront.
Common fee structures include a flat fee of £295, £495, £595 or £795, depending on the lender's standard pricing. Some lenders have a tiered fee structure where the fee increases with loan size, reflecting the higher administration and valuation cost on larger facilities. A small number of lenders offer entirely fee-free products where no arrangement fee is charged at all — typically at a slightly higher interest rate to compensate.
Lenders are required to include mandatory arrangement fees in the calculation of the APR they advertise, so in theory comparing APRs should account for fee differences. However, because APR is an annualised figure, a fixed fee has a much larger percentage impact on a short-term or small loan than on a long-term or large one. This means APR comparison alone may not reveal which deal is cheapest in absolute terms for your specific scenario.
Adding the Fee to Your Loan vs Paying Upfront
The most common approach is to add the arrangement fee to the loan balance, so it is repaid in monthly instalments over the full term alongside the capital and interest. This approach requires no upfront cash payment and keeps your immediate out-of-pocket costs at zero. However, because the fee is now part of your loan balance, you pay interest on it at your loan rate throughout the full term.
For a £500 fee added to a ten-year loan at 9.9% APR, the total additional cost over the term is approximately £300 in interest on top of the £500 fee itself — meaning the £500 fee effectively costs you around £800 by the time the loan is fully repaid. The longer the term and the higher the rate, the more a fee costs when added to the loan.
Paying the fee upfront at completion avoids this compounding cost but requires you to have cash available. If you are already borrowing because you need capital, paying a cash fee at the outset may not be practical. In that case, adding the fee to the loan remains the standard approach — just make sure the total amount repayable figure in your illustration includes the fee so you can compare accurately.
