thread Re: Why the origination fee through square loan is to high in Banking With Square

Why the origination fee through square loan is to high

Mrabara1970 — Sat, 20 Sep 2025 12:28:46 GMT

I wonder why the origination fee is to hight for a loan at square

Re: Why the origination fee through square loan is to high

TheRealChipA — Mon, 02 Oct 2023 15:58:09 GMT

Hi @Mrabara1970. Square only charges the fee that you are quoted and does not charge interest. It’s a flat-rate fee for the life of the loan. It is not an origination fee as is found on typical bank loans.

Re: Why the origination fee through square loan is to high

TheRealChipA — Mon, 02 Oct 2023 16:44:37 GMT

@Mrabara1970 I’ll add one more thing. After you have paid off your loan, you can figure out what the effective APR was by using this formula:

LoanFees / LoanAmount / DaysNeededToPayOffLoan * 365

At the beginning of the loan, if you assume that you won’t pay it off for 18 months (the maximum allowed), you can use this formula to calculate the expected APR for the life of the loan:

LoanFees / LoanAmount / 18 * 12

Obviously, this is not an apples-to-apples comparison since Square’s Loan fees are not the same as interest. Therefore, the longer it takes you to pay off the loan the less the APR. If you pay it off quickly, your effective APR ends up being higher since the loan fee is constant no matter how long you need to pay off the loan.