In today’s growing financial market, non-traditional lenders are becoming a feasible option for many consumers who need personal loans but don’t want to or can’t go through the bank-lending process. Upstart and SoFi represent two alternative lenders, both of which offer personal, unsecured loans to those who meet eligibility requirements.
However, though they both offer similar products, each lender focuses on a different type of borrower, and therefore it’s important to understand the basic differences between the two.
Upstart vs. SoFi: Comparison
|Rates (APR)||8.69% – 29.99%||5.74% – 16.99%|
|Loan Terms||3 or 5 years||2 – 7 years|
|Loan Amounts||$1,000 – $50,000||$5,000 – $100,000|
|Fees||Origination fee: Not provided|
Prepayment penalty: None
|No origination fee or prepayment penalty|
Getting a Personal Loan Through Upstart
Founded by ex-Google employees, Upstart leverages the power of artificial intelligence to automate the lending process and provide users with technology-based resources.
To apply for a loan through Upstart, potential borrowers must follow the intuitive loan application process. It begins with a series of questions about the reason for their loan, their educational background, and their current or expected source of income. Approximate rates are available upon application submission. If approved, funds will typically be available in as soon as a day.
To be eligible for a loan through Upstart, applicants must be at least 18 years of age; be a citizen or permanent resident of the U.S., but not living in West Virginia; have a valid Social Security number, email address, and checking account; and have one of the following: full-time job, full-time job offer starting within six months, a part-time job, or another source of income.
Basic Information: Upstart’s Rate, Terms, Fees, and Limits
Borrowers approved for a personal loan through Upstart can currently expect an APR between 8.69% and 29.99% and repayment terms of three to five years. Loans, which are available for amounts between $1,000 and $50,000, also come with a one-time origination fee, which is subtracted from the total disbursed loan amount.
Benefits of Upstart
If you’re a young borrower or have relatively thin or non-existent credit, finding a lender that will approve your loan and offer a competitive rate can be difficult, even if you have a reliable source of income. Upstart aims to change that by considering an applicant’s education, employment, and current and potential income.
Downsides of Upstart
When compared to other lenders, like SoFi, Upstart’s rates can be higher, but it’s also important to consider the eligibility leniency that accompanies an Upstart loan. Applicants who are approved for an Upstart loan might not be approved by some of the lower rate competitors.
Getting a Personal Loan Through SoFi
SoFi is quickly becoming a major name in lending and offers applicants a variety of debt solutions including personal loans, student loans, and mortgages.
While Upstart loans are designed for borrowers with average or young credit, SoFi personal loans are typically geared toward borrowers with good or excellent credit, with the average borrower having a credit score above 700. In addition to credit scores, SoFi also considers an applicant’s financial history, career experience, and monthly income and expenses.
Applicants must be 18 years or older, and be citizens or permanent residents of the United States or visa holders (J-1, H1B, E-1, O-1, or TN) with at least two years remaining. Additionally, citizens residing in Mississippi are not eligible for loans through SoFi.
Those applying for a loan usually find the process quick, and once the application is completed and approved, funds are typically available within a few days.
Basic Information: SoFi’s Rates, Terms, Fees, and Limits
Borrowers approved for a personal loan through SoFi can currently expect an APR between 6.26% and 14.87%, which is typically lower than credit card APRs, a point SoFi is quick to make on its site. Borrowers who wish to use the autopay functionality are also eligible for a 0.25% discount. Loans, which are not subject to origination fees, can range between $5,000 and $100,000. Terms are available for anywhere from three to seven years.
Benefits of SoFi
Sofi offers borrowers competitively low rates, a robust resource center, and a variety of member perks, including discounts on further loans, unemployment protection, and customer support seven days a week. Members also get discounts on additional loans (.125%). Together, these features make SoFi a comprehensive lending solution that extends beyond basic borrowing.
Downsides of SoFi
SoFi does come with a wealth of perks and good reviews, but because of their credit requirements, those with average, below average, or non-existent credit will likely find approval just out of reach.
Which lender is right for you? If you’re just graduating and haven’t quite established a strong credit history or lucrative source of income, or if you have average credit, Upstart may be the right choice for you. Since its loan decisions take into account a variety of factors, many of which consider your financial potential based on your education and career, approval may be more likely, and rates may be lower when compared to other lenders that target consumers with poor credit.
Conversely, if you have built up a solid credit portfolio and have steady, long-term income, a personal loan through Sofi will likely yield lower interest rates and a more flexible repayment plan, making SoFi the winner for borrowers with good credit.
Author: Jeff Gitlen
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