What we like:
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|Rates (APR)||6.99% – 24.99%|
|Loan Terms||3 – 7 years|
|Loan Amounts||$2,500 – $35,000|
|Fees||Origination fee: None|
Prepayment penalty: None
Late fee: $39
Discover is the third largest credit card company in America with around 50 million customers. But Discover also offers other financial products, including bank accounts, CDs, student loans, and personal loans. Discover personal loans can be used for any purpose, from financing big purchases to covering medical bills to remodeling your home.
Personal loans are especially beneficial to people who need a debt consolidation. When you borrow from Discover, your loan specialist will pay off your existing creditors directly and leave you with just one loan — often at a lower rate. This makes repayment simpler and cheaper. While Discover personal loans are a versatile and affordable source of funding, you need to understand the loan terms and compare them with other options.
This Discover personal loan review will help you understand the loan terms offered and how it compares to the best personal loans offered by other lenders.
In this review:
- How to Get a Discover Personal Loan
- Rates, Fees, & Other Basic Info
- Benefits of Discover Loans
- Downsides of Discover Loans
Getting a Discover Personal Loan
Discover makes it easy to check your rates. Simply visit the Discover website and use the menus to specify what you’ll use funds for and how much you want to borrow. If you’ve received an invitation, you can enter the invitation number to fast-track the process.
Checking your loan terms will result in a soft credit inquiry, so it won’t affect your credit score. Some other lenders conduct a hard credit inquiry, which will be recorded on your credit history and can damage your score.
>> Read More: Hard vs. soft credit inquiries
When you begin the application process, you’ll need to provide some basic financial information including your Social Security number and details about income and current debts. Your application can be completed entirely online, and you can even get a decision the day you apply. Once you’ve been approved for your loan, you can receive the funds as soon as the next business day.
You’ll have a choice of payment terms when you get a Discover personal loan. Discover also offers a 30-day guarantee, so if you return funds within 30 days, you’ll pay no interest.
Basic Information: Rates, Terms, Fees and Limits
To qualify for a Discover personal loan, you must:
- Be a U.S. citizen or permanent resident
- Be at least 18 years old
- Have a minimum household income of at least $25,000
- Have good credit
Before applying for Discover’s personal loans, here are a few other key things you need to know about the loan terms and conditions.
- You’ll receive a loan APR range from 6.99% to 24.99%.
- You can borrow up to $35,000.
- Loan repayment periods range from 36 to 84 months.
- There’s no origination fee, closing costs, or prepayment penalties.
- There may be late payment fees.
- Loan funds can be used for any purpose.
- You can receive money as soon as the next business day.
- The terms and conditions of your loan will be determined based on your credit profile, income, and other financial factors, so you will need to visit Discover’s website to find out the specifics of what you’d pay for your loan.
The Benefits of Discover Loans
Discover loans have some substantial benefits including the following:
- The loan term is longer than many competitors. It is common for lenders to require repayment in five years or less. Avant, for example, requires repayment of personal loans in 24 to 60 months, while Best Egg loans have a three-year or five-year repayment term. Discover offers more flexible repayment terms, allowing you to take as long as seven years to repay your loans. While longer repayment periods mean you pay more in total interest, you’ll benefit from lower monthly payments, which may be a better fit with your budget.
- Interest rates are competitive. Discover offers some of the best rates available. LendingClub loans, for example, come with APRs between 6.95% and 35.89%, while SoFi charges between 7.33% and 15.49% APR with a discount for enrolling in autopay. Generally, Discover offers comparable or better rates, although its maximum rate is higher than SoFi’s.
- Discover simplifies debt consolidation. Discover is one of few personal loan lenders that will pay off your existing debts directly. Most other lender deposit funds in your bank account, and you have to repay your own creditors. This adds extra steps to the process. While some other lenders, such as American Express, do this, it’s not common. And unlike Discover, which is open to anyone, Amex loans are available only to cardholders with invitations.
- No origination fees: Discover doesn’t charge origination fees for its personal loans. With some competitors, fees could be substantial. Avant charges an administrative fee up to 4.75%, for example, and Prosper’s origination fees run as high as 5% of the borrowed amount. If your loan charges an origination fee, the money is taken out of the funds you receive, leaving you with less even though you have to pay back the full borrowed amount.
- Quick funding: You can get money as soon as the next business day, which is important when you need quick access to cash. Many competitors take much longer to fund loans. LendingClub, for example, indicates money is usually available within around a week after you’ve been approved for a loan.
As you can see, Discover personal loans have many significant advantages and are definitely worth considering.
The Downsides of Discover Loans
Discover Loans also have some downsides including the following:
- You’ll need good credit to qualify. Discover’s minimum credit score is 660 and many borrowers have even higher credit scores. Other competitors allow you to borrow with scores in the low 600s, or sometimes as low as 580. Upstart, for example, charges higher interest rates on its personal loans, but it looks beyond your credit score to consider education and employment, which can make financing available to more people.
- Low loan limits. The maximum loan amount you can borrow with Discover Personal Loans is $35,000. Many competitors allow larger loans. Prosper and LendingClub both allow you to borrow up to $40,000, and LightStream allows you to borrow up to $100,000.
- Late Payment Fees. Despite its general lack of other fees, Discover may charge a late fee if you miss a loan payment.
If you want to borrow a large amount of money or if your credit score isn’t very good, Discover may not be an option for you despite the many advantages of their loans.
The Bottom Line
If you are able to qualify for Discover Personal Loans, you will likely get a good loan at a low rate and you will have your choice of repayment terms. This gives you the necessary flexibility to make the loan work with your budget. You can also make debt consolidation very simple.
However, not everyone is eligible to get Discover loans due to income and credit history requirements. Also, other personal loan lenders offer larger loan amounts, so they may be a better alternative if you have a lot of debt to consolidate or are borrowing to pay other major expenses.
To make sure Discover Personal Loans are best for you, shop around and get quotes from several different lenders in order to see how they stand up to what Discover offers. And remember not to borrow more than you can afford to pay back.3.96 Discover Personal Loans
Author: Christy Rakoczy
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