What we like:
Use of advanced data and algorithms in application
|Rates (APR)||7.99% – 35.89%|
|Loan Terms||3 or 5 years|
|Loan Amounts||$1,000 – $50,000|
|Fees||Origination fee: 1.5% – 6%|
Prepayment penalty: None
Late fee: $10
In the nearly 10 years since the financial crisis, the new frontier in consumer finance has been online lending, dominated for much of that time by pioneers like LendingClub.
More recently, online loan companies have proliferated, filling the void left by retreating traditional lenders who have little appetite for consumer lending to the masses.
Among the newer entrants to the market, Upgrade Inc. appears positioned to quickly take on the big players and it certainly has the pedigree to do so. This is the Upgrade Personal Loans Review.
Upgrade Has High Powered DNA for Success
Upgrade is not your typical new player in the online lending space. Founded in August 2016, the new online lender just started issuing loans in April 2017; but, the brain trust behind the new venture has initiated nearly $25 billion in loans to more than 2 million borrowers. The two founders of Upgrade also founded Lending Club, the most successful online lender to date. Renaud Laplanche was the CEO of Lending Club and takes on the same role with Upgrade. Another Lending Club and Upgrade co-founder, Soul Htite, also founded Dianrong, one of the largest marketplace lending platforms in China.
Laplanche and Htite are joined by other Lending Club execs – Jeff Bogan is the new CFO, Visar Nimani is Chief Technology Officer, Adelina Grozdanova is head of Upgrade’s Investor Group and Matt Wierman is head of Personal Loans. With all of that firepower, they have had no problem raising capital. In March 2017, it closed its Series A round of financing, raising $60 million.
The Next Generation Online Lender?
With more than a decade of setting the standard in the marketplace, the Upgrade team expects to introduce a new generation online lender with broader reach, advanced technology and value-added services. While Lending Club and other online lenders typically approve just 10% to 15% of personal loan requests, Upgrade wants to nurture the 85% to 90% who are rejected by helping them improve their credit standing with free credit monitoring services and educational tools similar to what is offered through Credit Karma. Its goal is to coach consumers to creditworthiness that can qualify for a personal loan on Upgrade’s lending platform.
Upgrade Personal Loan Essentials
Upgrade offers unsecured personal loans ranging from $1,000 to $50,000 with repayment terms of 36 or 60 months.
As of May 23rd, 2017, the annual percentage rates (APR) range from 6.99% to 35.97%. You won’t know your actual APR until after you submit your application. All personal loans have an origination fee of 1% to 6%, which is deducted from the loan proceeds.
The application process is quick and easy, taking less than five minutes to complete. Once the application is submitted, you could receive an answer within a matter of minutes. Upgrade promises funding to your checking account within one day of clearing verifications. Upgrade offers the option of automatic payments debited from your checking account. You can also customize your due date for a more convenient payment schedule.
Unlike Lending Club, which operates a marketplace lending platform that matched people who have money to lend with people who want to borrow money, Upgrade will originate its personal loans through more traditional means. Upgrade has partnered with WebBank, a Salt Lake City-based industrial bank, as the loan originator for all loans obtained through the Upgrade lending platform.
The loans will be purchased by institutional asset managers instead of individual investors and Upgrade will retain some loans on its own books. That will require the loans be of a higher quality than many of the loans initiated by Lending Club, which has run into problems with its lower quality loan portfolio.
Who Upgrade is Targeting
Initially, Upgrade expected to target consumers who want to consolidate their credit card debt with plans to move into home and auto lending at some point. However, the company offers funding to customers for various other reasons including home improvement projects, such as solar panel installation, or other major purchases. The only unqualified expense includes education expenses.
One of the twists Upgrade is introducing is a new proprietary underwriting process that includes advanced data technology and algorithms for quickly determining the creditworthiness of borrowers. One major difference is that Upgrade focuses on free cash flow as a primary determinant. Borrowers must have at least $1,000 of free cash flow to be considered for a loan. In addition, Upgrade has a lower debt-to-income threshold.
While that is not likely to expand the number of people who can qualify for a loan, the other twist introduced by Upgrade is a consumer-oriented learning and credit management platform to help them improve their credit standing so they can eventually become eligible for a loan. As of April 13, 2017, this learning platform, which will also be available through a smartphone app, is not up and running, but it is expected to be operational soon.
What to Expect from Upgrade
Having just issued its first loans in early April, it’s too soon to formulate reliable commentary on Upgrade. However, as the name seems to imply, its founders expect their new company to be a step up from their hugely successful first venture. Those are lofty expectations, but if anyone can achieve them, it is the highly talented and experienced management team of Upgrade. Time will tell if Upgrade is able to position itself in the market alongside the major online lenders like Social Finance aka SoFi and Upstart.
Upgrade CEO, Renaud Laplanche, promises a borrowing experience unlike any available from their competitors. In a press release, Laplanche stated as his goal to “introduce innovations that help consumers better understand their credit potential, unlock that potential and obtain more affordable credit.”3.84 Upgrade Personal Loans
Author: Jeff Gitlen
Personal Loans Information
Personal Loan Reviews