Upgrade is a reputable online lender that offers personal loans to individuals with various credit scores. In this comprehensive review, we will delve into the key aspects of Upgrade personal loans, including credit score requirements, income qualifications, co-signers and co-applicants, loan amounts, repayment terms, fees, and additional benefits. Whether you have fair credit or a lower credit score, Upgrade aims to provide you with a solution to consolidate debt and improve your credit rating simultaneously.
Credit Score Requirements
Upgrade personal loans cater to individuals with credit scores as low as 560. This makes Upgrade an attractive option for borrowers seeking access to small loan amounts, especially those with fair or poor credit. However, keep in mind that the most competitive rates are reserved for applicants with the highest creditworthiness. It’s important to note that meeting the minimum credit score requirement does not guarantee approval but is a crucial factor in the underwriting process.
Income Requirements
Upgrade does not explicitly disclose its debt-to-income (DTI) ratio requirements. However, it places significant emphasis on free cash flow when evaluating loan applications. Approved borrowers typically have a minimum of $1,000 in free cash flow each month, with a DTI ratio of approximately 40%. This highlights the importance of demonstrating the ability to repay the loan through a steady income stream.
Co-signers and Co-applicants
Upgrade allows for co-applicants who meet the minimum credit score requirements. This is particularly beneficial for less creditworthy borrowers, as having a co-applicant can increase the chances of qualifying for a larger loan or securing a more competitive APR. Unfortunately, Upgrade does not accommodate co-signers. During the online prequalification process, Upgrade makes it easy to determine the rate you qualify for as an individual or joint applicant by selecting “Joint Application” when prompted.
Loan Amounts and Repayment Terms
Upgrade offers personal loans ranging from $1,000 to $50,000, providing borrowers with flexibility in meeting their financial needs. Repayment terms typically range from 3 to 5 years, allowing borrowers to choose a timeline that suits their budget and financial goals. For larger loans, such as home improvement loans or loans exceeding $30,000, Upgrade extends the repayment term to 7 years, offering borrowers additional flexibility.
Fees
It’s essential to consider the fees associated with personal loans to accurately assess the overall cost. Upgrade personal loans have an origination fee ranging from 1.85% to 9.99%, which is deducted from the loan proceeds. Additionally, Upgrade charges a late fee of $10 and a failed payment fee of $10. Evaluating these fees is crucial in determining the affordability of the loan and ensuring it aligns with your financial capabilities.
Additional Benefits
Upgrade stands out among its competitors by offering multiple rate discounts, providing borrowers with opportunities to lower their annual percentage rate (APR). These discounts include:
- Autopay discount: By setting up automatic loan payments, borrowers can enjoy a 0.5 percentage point discount on their APR. This effortless measure can help reduce the overall cost of the loan.
- Direct pay discount: Upgrade provides a rate reduction of 1 to 3 percentage points for debt consolidation loans when borrowers choose to have the lender directly pay off their debts. This feature simplifies the consolidation process and is unique among bad-credit lenders.
- Rewards checking discount: Borrowers with multiple Upgrade products, such as a checking account, may qualify for a rate discount of up to 20% on their personal loan. This incentive allows borrowers to potentially secure a lower APR and save money over the loan term.
Application Process
Applying for an Upgrade personal loan is a straightforward process that begins with prequalification. By entering the desired loan amount and purpose on Upgrade’s website, applicants can access the lender’s pre-qualify form. This step involves providing basic information such as name, address, birth date, and income. Creating an account with an email and password and entering the Social Security number are also required. Prequalification does not result in a hard credit inquiry, preserving the applicant’s credit score.
Qualified borrowers are presented with multiple loan offers, including various loan amounts, rates, repayment terms, and monthly payments. Choosing the offer that aligns with their budget and financial goals, applicants can proceed to the formal personal loan application. At this stage, Upgrade may request specific documents, such as W-2s and pay stubs, to verify the information provided during prequalification. A hard credit check is conducted during the application process, which may temporarily impact the applicant’s credit score.
Once approved, borrowers can expect to receive their funds within one to a few business days. Upgrade offers the convenience of sending loan funds the day after approval, with the exception of cases where funds are directly paid off to other debts. It is crucial to devise a repayment plan and ensure timely payments, as Upgrade reports payment information to major credit bureaus. On-time payments can positively impact credit scores, while missed payments can have adverse effects.
Comparing Upgrade to Other Lenders
When considering personal loans, it’s essential to compare lenders to find the best fit for your needs. Upstart and Best Egg, both online lenders, offer similar borrowing requirements to Upgrade and are suitable options for borrowers with fair or bad credit scores (689 or lower).
Upgrade vs. Upstart
Upstart provides instant loan application decisions and can fund loans within one business day. While Upstart offers rates similar to Upgrade, it may be more accommodating to borrowers with low credit scores or thin credit histories, thanks to its alternative data underwriting model. However, Upgrade may have an advantage as a debt consolidation lender due to its offering of direct payment to creditors and debt consolidation discounts.
Upgrade vs. Best Egg
Best Egg, like Upgrade, has slightly higher minimum credit score requirements and offers comparable rates. Best Egg specializes in personal loans for large purchases and debt consolidation. While Best Egg provides direct payment to creditors for debt consolidation loans, it does not offer rate discounts or a mobile app, which may be advantageous features for some borrowers.
Conclusion
Upgrade personal loans provide a viable solution for individuals with credit scores as low as 560 who are seeking access to small loan amounts. The lender’s emphasis on free cash flow and its acceptance of co-applicants make it an attractive option for borrowers with fair or poor credit. Furthermore, Upgrade’s multiple rate discounts, longer repayment terms for larger loans, and additional benefits, such as a mobile app and credit assistance, set it apart from its competitors.
When considering an Upgrade personal loan, it’s essential to evaluate your financial situation, including credit score, income, and ability to repay the loan. By gathering the necessary documents, prequalifying, and comparing loan offers, borrowers can make informed decisions and choose the loan that best meets their needs. Upgrade’s commitment to reporting payments to credit bureaus provides an opportunity to improve credit scores over time, making it a potential stepping stone towards a stronger financial future.
