Upstart aims to provide financing options for individuals with less-than-perfect credit. In this review, we will go over the key aspects of Upstart personal loans, including its loan options, application process, eligibility requirements, pros and cons, and how it compares to other popular lenders in the market.
Upstart Personal Loans at a Glance
Upstart offers personal loans ranging from $1,000 to $50,000, making it suitable for a wide range of financial needs. The platform boasts one of the fastest funding times among lenders, with loan funds typically available within one business day after approval. However, it’s important to note that Upstart has limited repayment term options, offering only three-year and five-year terms.
Table: Upstart Personal Loans Features
| Features | Details |
|---|---|
| Minimum credit score | None |
| APR | 6.50% – 35.99% |
| Fees | – Origination: 0% to 12% – Late fee: 5% or $15 – Returned check fee: $15 |
| Loan amount | $1,000 to $50,000 |
| Repayment terms | 3 years or 5 years |
| Time to fund after approval | 1 day |
| Loan availability | Not available in Iowa |
Note: The information provided in this table is subject to change based on Upstart’s policies and guidelines.
Features of Upstart Personal Loans
Alternative Data Use
One of the key differentiators of Upstart is its utilization of alternative data in its underwriting model. While traditional lenders primarily rely on credit scores and financial history, Upstart takes a more holistic approach. The platform considers factors such as college education, job history, and residence to evaluate borrowers. This nontraditional underwriting model enables Upstart to approve more borrowers and potentially offer lower-rate loans compared to lenders that solely rely on credit scores.
Fast Funding
Upstart prides itself on its swift funding process. After submitting an application, borrowers can receive an instant approval decision. If approved, loan funds are typically disbursed as quickly as one business day. This expedited funding can be particularly beneficial for individuals facing urgent financial needs or unexpected expenses.
Soft Credit Check Prequalification
To help borrowers assess their eligibility without impacting their credit scores, Upstart offers a soft credit check prequalification process. This allows individuals to check their rate and potential loan terms without a hard credit inquiry. By providing basic information, such as loan amount and purpose, borrowers can quickly obtain an estimate of the interest rate they may qualify for.
Flexible Payment Dates
Upstart provides borrowers with the flexibility to choose their monthly payment date. While the original payment due date cannot be changed, borrowers can make payments up to 15 days before or after the due date without incurring late fees. This feature allows for greater convenience and helps borrowers align their loan repayments with their cash flow.
Free Financial Education Resources
In addition to its lending services, Upstart offers valuable financial education resources on its blog. These resources cover topics such as personal loans, building credit, and managing finances. Borrowers can access informative articles, loan calculators, and even learn about news events that impact personal loans and credit. This commitment to financial literacy sets Upstart apart from many other lenders in the industry.
Potential Drawbacks of Upstart Personal Loans
While Upstart offers several unique features, it’s important to consider the potential drawbacks before applying for a personal loan through the platform.
Limited Repayment Term Options
One limitation of Upstart personal loans is the restricted range of repayment terms. Borrowers can choose between three-year and five-year terms, which may not offer the flexibility desired by some individuals. Other lenders in the market provide a wider range of repayment term options, allowing borrowers to tailor their loan to their specific needs and financial goals.
Origination Fees
Upstart charges origination fees for its personal loans, which can range from 0% to 12% of the loan amount. While origination fees are common in the personal loan industry, it’s important to consider how they impact the total loan amount and the overall cost of borrowing. Borrowers should ensure that the loan amount is sufficient to cover their expenses after accounting for the origination fee.
No Co-signed, Joint, or Secured Loan Options
Unlike some other lenders, Upstart does not offer co-signed, joint, or secured loan options. These types of loans can be beneficial for individuals who may not qualify for a loan based on their own credit history or income. Co-signers or collateral can help borrowers secure better loan terms or access larger loan amounts. If these options are important to you, it may be worth exploring alternative lenders that offer such features.
Qualifying for an Upstart Personal Loan
To be eligible for an Upstart personal loan, applicants must meet certain requirements. While Upstart does not disclose all of its borrowing requirements, the platform considers over 1,000 data points in its evaluation process. Here are the basic qualifications for an Upstart personal loan:
- U.S. citizenship or permanent residency
- At least 18 years old (may vary by state)
- Valid email account
- Verifiable name, date of birth, and Social Security number
- Full-time job, starting a full-time job within six months, or regular part-time job
- Bank account
Upstart’s inclusive approach to lending means that there is no minimum credit score requirement. The platform considers applicants with all types of credit, including those with insufficient credit history to generate a FICO score. Minimum annual income requirements start at $12,000, and Upstart accepts various income sources beyond employment.
Applying for an Upstart Personal Loan
The application process for an Upstart personal loan is straightforward and can be done online. Here are the steps to apply:
- Pre-qualify: Start by visiting Upstart’s website and selecting “Check My Rate.” Provide the requested information, including loan amount, purpose, personal details, and income sources. This step involves a soft credit check and does not impact your credit score.
- Complete the application: If you receive a favorable pre-qualification offer, you can proceed with the full application. Submit the required documentation, including proof of income, address, and Social Security number. Upstart may also request additional information to verify your eligibility.
- Review and accept the loan terms: Once your application is processed and approved, carefully review the loan terms, including the interest rate, repayment term, and any associated fees. If you agree to the terms, you can accept the loan offer.
- Receive funds: Upon accepting the loan offer, the funds will be disbursed to your designated bank account. In most cases, borrowers receive their funds within one business day, allowing them to address their financial needs promptly.
Upstart Personal Loans vs. Other Lenders
To gain a comprehensive understanding of Upstart’s offerings, it’s essential to compare it to other popular lenders in the market. Here’s how Upstart stacks up against Upgrade, Avant, and Wells Fargo:
Upstart vs. Upgrade
Both Upstart and Upgrade cater to borrowers with less-than-ideal credit scores. While Upstart’s minimum recommended credit score is 600, Upgrade accepts applicants with a minimum credit score of 580. However, Upstart offers larger loan limits, up to $50,000, compared to Upgrade. On the other hand, Upgrade provides a wider range of repayment terms, spanning from two to seven years. Choosing between the two will depend on your desired loan amount and preferred repayment timeline.
Customer Satisfaction and Support
Customer satisfaction is an important aspect to consider when choosing a lender. Upstart has received positive reviews on Trustpilot, earning a 4.9 (Excellent) TrustScore based on over 40,000 reviews. However, it’s worth noting that in the 2023 J.D. Power U.S. Consumer Lending Satisfaction Study, Upstart ranked 15th out of 18 lenders, receiving a below-average score. When it comes to customer support, Upstart provides assistance via phone and email seven days a week from 9 a.m. to 8 p.m. ET.
Conclusion
Upstart personal loans offer unique features, such as the utilization of alternative data in underwriting, fast funding, flexible payment dates, and free financial education resources. While there are some limitations, such as limited repayment term options and origination fees, Upstart provides a viable lending option for individuals with less-than-perfect credit. Before deciding on Upstart, it’s beneficial to compare it with other lenders to ensure you choose the best fit for your financial needs and goals.
