What we like:
Availability of customer support
|Rates (APR)||8.69% – 29.99%|
|Loan Terms||3 or 5 years|
|Loan Amounts||$1,000 – $50,000|
|Fees||Origination fee: 0.0% – 8.0%|
Prepayment penalty: None
Late fee: 5% of past due amount or $15, whichever is greater.
Upstart was founded in 2012 with a focus on leveraging AI and machine learning to automate the borrowing process. Upstart aims to price credit appropriately by looking beyond just credit scores to consider your employment, income, education, and other key factors. It has a direct-to-consumer lending platform where borrowers can get personal loans, and it provides its technology to other financial institutions including banks and credit unions.
While there are benefits to Upstart, there are downsides to consider too. This Upstart personal loans review will help you to make the most informed choice about how best to borrow to meet your financial needs.
In this review:
- How to Get an Upstart Loan
- Rates, Fees, & Other Basic Info
- The Benefits of Upstart Personal Loans
- The Downsides of Upstart Personal Loans
Getting an Upstart Loan
If you’re looking for a personal loan, there are many reasons to consider Upstart. Interest rates are in line with most competitors, and you have the flexibility to use the loan funds for virtually anything you’d like. You may borrow from Upstart to cover the cost of a big expense, such as a home renovation or a wedding. You might use the funds to remodel your home or for credit card debt consolidation. It’s up to you what you do with the loan proceeds once you’ve been approved.
>> Read more: Best Home Improvement Loans
The Application Process
Applying for an Upstart personal loan is quick and easy, and the entire loan application process can be completed online.
When you first visit the Upstart website, you can get an estimated interest rate and your chances of loan approval without having a hard inquiry entered on your credit report. This is important because each hard inquiry recorded on your credit history remains for two years, and too many hard inquiries cause your FICO score to drop.
To find out what rate you might receive, you’ll need to submit some basic personal information such as your Social Security number and current income. If you decide to move forward with your loan application, Upstart does a hard inquiry into your credit history to determine your full financial status, including your job history, debt-to-income ratio, and the types of debt you carry, such as risky credit card debt or more reasonable student loans.
The interest rate you’re offered is based in part on your credit score, but Upstart also looks beyond just this to get an idea of the type of borrower you are. For example, Upstart will consider your career, whether you have a college degree, and other details about your finances and professional life. Since Upstart doesn’t focus solely on FICO credit ratings, it’s an especially great choice for young people who are still working on building their credit scores.
Choosing Your Loan Term
Upstart will also give you an option for how long you want your loan term to be. You can choose a three-year repayment term or a five-year term. Longer loans can have higher rates and will also cost more in the long run due to the fact you’re paying interest over more time. However, monthly payments will be lower than on loans with shorter repayment timelines, since you have more time to pay back the loan.
Upstart typically provides you with an initial rate proposal and loan offer right away. Once you accept, you submit your full application. Sometimes you may have to submit additional documents, which can delay the application process. When your final application for your loan is approved, you’ll receive your funds right away. In fact, 99% of borrowers from Upstart have the money in their bank account by the next business day after their loan is approved.
Basic Information: Rates, Terms, Fees and Limits
If you’re considering Upstart personal loans, here are a few key facts to know about the terms and conditions of these loans:
- You’ll pay an interest rate between 7.75% and 35.99%. The exact rate you’ll pay will be determined by your credit score, academic history, career, and other factors.
- There is an origination fee charged for some Upstart personal loans. The fee ranges from 0% to 8% depending upon borrower qualifications.
- The minimum loan amount is $1,000, and the maximum you can borrow is $50,000.
- Upstart loans are fixed-rate loans, which means rates stay the same for the life of the loan and your payment never changes while you’re repaying your debt.
- You’ll have the option to either repay your loan over a three-year term or a five-year term. Payments will be made monthly, and there is no prepayment penalty.
- Loaned funds are available the next business day after loan approval for 99% of borrowers who take out Upstart personal loans.
- Upstart loans are available to borrowers with average credit and lower. Upstart has been known to approve borrowers with credit scores as low as the low-600’s which is well below the minimum credit score required by many other lenders.
>> Read More: What Credit Score Is Needed for a Personal Loan?
The Benefits of Upstart Personal Loans
There are many benefits to Upstart personal loans. Some of the big advantages include the following:
- You can borrow just $1,000 if you want to. Many other competitors have larger minimum loan limits. LightStream, for example, requires you to borrow a minimum of $5,000.
- Upstart offers competitive interest rates. Its interest rate range is between 7.75% and 35.99%. By comparison, LendingClub loans have APRs ranging from 6.95% to 35.89%, and similar competitors like Prosper have similar APR ranges. While Upstart’s rates start a little higher, their starting rate is lower than some alternatives such as Avant Loans, which have a minimum APR of 9.95%.
- You can get your money quickly. Being able to access your money the next business day is a huge advantage if you need fast access to cash. Quick funding means Upstart could save you from being forced to get a costly payday loan just to get fast money. Other alternatives, such as Prosper and LendingClub, take between five days to a week to get you your money after you’ve accepted your loan terms.
- You can qualify even if you don’t have a high credit score. When you’re still building credit, it can be frustrating when you’re not able to borrow when you need to. Upstart makes qualifying easier by considering several additional factors, such as your area of study.
- You’ll receive a 10-day grace period on late payments. If your payment falls outside of the grace period, Upstart will charge you a late fee of 5% of the unpaid amount, or $15, whichever is greater.
The Downsides of Upstart Personal Loans
Downsides of Upstart personal loans include the following:
- The maximum loan amount is lower than some competitors. You can only borrow a maximum of $50,000 from Upstart. Some competitors, such as LightStream, allow you to borrow up to $100,000. If you have a lot of debt to consolidate or if you need to make a major purchase, Upstart may not provide all the funding you’d need.
- The origination fee is high. The fee for Upstart could go as high as 8%. This is well above the maximum origination fee charged by others. For example, Prosper’s maximum origination fee is 5% and LendingClub’s is 6%. And many other loans, such as Discover Personal Loans, don’t even charge an origination fee.
Bottom Line: Upstart Personal Loans are Ideal for Some Borrowers
Upstart is a good choice for borrowers who are still building their credit, as well as people looking to borrow just a small amount. If you’re able to qualify for an Upstart personal loan with a low origination fee, it may be a great lender for you. But if you have good or excellent credit and you want to borrow at least $5,000, you should compare Upstart quotes with the best personal loan companies.
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Author: Christy Rakoczy
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