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The borrowers seek flexible terms, affordable rates, and a simple application procedure when searching for a personal loan. Discover Personal Loans and Upstart are two of the market’s most well-known lenders. However, they both have different features, eligibility requirements, costs, customer reviews, and aspects. It’s important to know the distinct features when comparing Upstart vs Discover Personal Loan.
Upstart, an AI-powered loan platform, is a good choice for people with little credit history as it examines applicants based on non-traditional factors. Since a personal loan involves borrowing a fixed amount and repaying it with interest over time, it’s important to learn how a personal loan works before choosing a lender. Meanwhile, Discover Personal Loans target customers with good to exceptional credit and provide flexible terms and low rates.
Both provide unsecured, fixed-rate loans for a range of uses, but Discover is best suited for customers with an outstanding credit, while Upstart’s creative strategy can appeal to non-traditional borrowers. Your credit history and financial requirements will decide if you pick a Discover or an Upstart personal loan.
What is Upstart Personal Loan?
Upstart is an online lending platform that uses artificial intelligence (AI) and machine learning to assess loan applications. Instead of just looking at credit scores, Upstart considers education, employment history, and income potential to approve borrowers.
It was founded in 2012 by former Google executive Dave Girouard, Thiel Fellow Paul Gu, and ex-Google manager Anna Counselman. Upstart aims to improve access to affordable credit while reducing the risks and costs associated with lending. The platform aims to expand access to credit and offer competitive rates by leveraging advanced AI algorithms, making it a notable player in the personal lending industry.
What is Discover Personal Loan?
Discover Financial Services is a prominent American financial services company headquartered in Riverwoods, Illinois. Established in 1985 by Sears, it has evolved into a full financial institution offering a range of products and services.
Its commitment to offering personal loans with no fees, fixed rates, and flexible repayment terms underscores its dedication to providing transparent and customer-friendly financial solutions. This approach has contributed to its reputation as a reliable lender in the personal loan market.
Upstart vs. Discover Personal Loans: An Overview
You can make a wise decision between Upstart and Discover based on your individual financial situation by considering factors such as loan amounts, interest rates, credit score requirements, and repayment terms. Here’s a snapshot comparison of both lenders:
| Feature | Upstart | Discover |
|---|---|---|
| Minimum Credit Score | None (AI-based underwriting) | 660 |
| Loan Amounts | $1,000 – $50,000 | $2,500 – $40,000 |
| Loan Terms | 3 or 5 years | 3 to 7 years |
| Origination Fee | 0% – 12% | None |
| Interest Rates | Varies, can be high | Fixed rates, generally lower |
| Funding Time | As soon as one business day | Next-day funding available |
| Co-signed Loans | No | No |
| Prepayment Penalty | No | No |
| Direct Creditor Payment | No (for debt consolidation) | Yes |
| Direct 123 Payment | No (for debt consolidation) | Yes |
What is The Difference Between Upstart vs Discover Personal Loan?
You may select the lender that best suits your financial needs by being aware of the main distinctions between Upstart and Discover when comparing their personal loans. Here’s a detailed comparison:
1. Loan Amounts and Terms
Upstart offers personal loans ranging from $1,000 to $50,000, providing flexibility for both small and large expenses. The repayment terms are limited to either 3-year or 5-year periods. In contrast, Discover provides loans between $2,500 and $40,000, which may not accommodate borrowers seeking smaller amounts. However, Discover offers more flexible repayment terms, extending up to 7 years.
2. Interest Rates and Fees
Upstart has an Annual Percentage Rate (APR) ranging from 6.40% to 35.99%. However, borrowers should be aware of origination fees that can be as high as 8%, which are deducted from the loan amount before disbursement. Meanwhile, Discover offers APRs between 7.99% and 24.99% and stands out by not charging any origination fees.
Upstart’s starting APR is lower, but the potential high origination fees could offset the benefits. In contrast, Discover’s no-fee structure might result in overall cost savings, despite a slightly higher starting APR.
3. Eligibility and Approval Process
Upstart considers alternative factors beyond traditional credit scores, such as education and employment history, making it accessible to individuals with limited or fair credit. On the other hand, Discover requires a minimum credit score of 660, along with a steady income and a solid credit history, catering primarily to borrowers with good to excellent credit.
Therefore, Upstart may be more accommodating for those with less-established credit profiles, while Discover is suited for applicants with stronger credit standings.
4. Funding Speed
Both lenders provide fast funding, often disbursing loans as quickly as the next business day after approval. This makes them both viable choices for borrowers who need quick access to funds. Upstart can disburse funds as quickly as the next business day after loan approval. Meanwhile, Discover also offers next-day funding upon approval.
5. Customer Service and Reputation
Upstart has received mixed reviews. On Trustpilot, it boasts a high rating of 4.9 out of 5 based on over 45,000 reviews, with customers praising its easy application process and quick loan approval. However, the Better Business Bureau’s website reflects an average rating of 1.2 out of 5 from 240 customer reviews, citing concerns about application denials, fees, and communication issues. Discover, on the other hand, is renowned for its strong customer service reputation, offering 24/7 U.S.-based support.
What Is Upstart Best For?
Upstart Personal Loans is an amazing choice for borrowers with limited or fair credit who may struggle to qualify for loans from traditional lenders. Unlike many financial institutions that primarily focus on credit scores, it considers additional factors such as education, employment history, and earning potential. This broader evaluation process increases the chances of approval for individuals who may not have an extensive credit history but demonstrate financial responsibility in other ways.
Another major advantage of Upstart is its quick funding process, making it ideal for individuals who need immediate access to cash. Once a loan is approved, funds can be disbursed as soon as the next business day. This is particularly beneficial for those facing urgent expenses, such as medical bills, car repairs, or unexpected home costs. The streamlined application and approval process further enhance its appeal, allowing borrowers to secure financing without unnecessary delays.
This platform is also a suitable option for those seeking smaller loan amounts. Many lenders impose higher minimum loan requirements, however, Upstart provides loans starting from as little as $1,000. This makes it an attractive choice for borrowers who need modest financing for personal projects, consolidating minor debts, or covering short-term expenses without taking on a large financial burden.
However, one of the key trade-offs with Upstart is its origination fee, which can be as high as 8%. This fee is deducted from the loan amount before disbursement, meaning borrowers receive less than the full loan amount they applied for. It does offer competitive interest rates, but these fees can significantly impact the overall cost of borrowing. As a result, Upstart is best suited for individuals who are comfortable with these higher fees in exchange for easier qualification and fast funding.
Overall, the online lending platform is a strong option for borrowers who may not have perfect credit but still need access to financing. It offers an alternative lending approach that provides quick access to funds and smaller loan amounts, though borrowers should carefully consider the impact of origination fees on their total loan cost.
What is Discover Best For?
Discover Personal Loans is a perfect choice for borrowers with good to excellent credit who want access to competitive loan terms and lower overall borrowing costs. It requires a minimum credit score of 660 unlike lenders that cater to individuals with limited credit histories, making it best suited for applicants with strong financial backgrounds. Those with higher credit scores may qualify for the best interest rates, which can lead to significant savings over the life of the loan. Additionally, Discover considers income stability and credit history, ensuring that borrowers have a solid financial foundation before approving a loan.
One of Discover’s biggest advantages is its no-fee structure. Many lenders, including Upstart, charge origination fees that reduce the amount a borrower receives, but the American financial services company does not impose such charges. This means borrowers receive the full loan amount they apply for, without deductions for processing or administrative costs. For individuals who prioritize transparency and cost savings, this fee-free approach can be a major benefit, especially when compared to lenders that charge upfront fees of up to 8%.
Another key benefit of Discover is its flexible repayment terms, which extend up to seven years. This longer repayment period allows borrowers to spread out their payments, reducing their monthly financial burden. For those taking out larger loan amounts, the ability to choose a longer repayment schedule can make managing debt more manageable. Shorter repayment terms are available, but the flexibility to select a term that aligns with a borrower’s budget and financial goals makes this company an attractive option for those seeking customized repayment solutions.
Discover also appeals to individuals who prefer working with a well-established, traditional lender known for reliability and strong customer service. As a reputable financial institution, it offers 24/7 U.S.-based customer support, ensuring borrowers can get assistance whenever needed. This level of service and trust is particularly valuable for those who want a lender with a proven track record of stability and excellent customer care.
In a broader sense, Discover is best for borrowers with strong credit who seek a no-fee loan with flexible repayment terms. Its reputation as a trusted financial institution, combined with its customer-centric approach, makes it a great choice for individuals looking for a straightforward and cost-effective personal loan solution.
Upstart vs. Discover Personal Loan: Pros and Cons
A borrower’s eligibility, costs, flexibility, and financing timeliness are all important considerations when deciding between Upstart and Discover personal loans. To help you in selecting the best lender for your financial need, a summary of their benefits and drawbacks is provided below:
Overview of Upstart Personal Loan
| Pros | Cons |
|---|---|
| Inclusive Approval Criteria | Origination Fees |
| Low Income Requirement | Limited Repayment Terms |
Pros of Upstart:
Upstart stands out from traditional lenders by adopting a more holistic approach to loan approval. Instead of solely relying on credit scores, the platform evaluates additional factors such as education, employment history, and earning potential. This unique method enables individuals with limited or no credit history, including young professionals and recent graduates, to qualify for personal loans. By incorporating a broader range of criteria, Upstart provides opportunities for borrowers who might otherwise struggle to secure financing from conventional lenders.
The company accommodates borrowers with lower incomes unlike many financial institutions that impose high income thresholds for loan eligibility. This inclusive approach ensures that individuals from diverse financial backgrounds have access to personal loans, even if they do not earn substantial salaries. By considering factors like future earning potential rather than just current income, Upstart broadens its accessibility, making it an appealing option for those who may not meet the strict financial requirements of traditional lenders.
For those in urgent need of financial assistance, Upstart offers a swift loan disbursement process. Eligible applicants who receive approval can expect funds to be deposited into their bank accounts as soon as the next business day. This rapid turnaround time is particularly beneficial for individuals facing unexpected expenses, such as medical bills, home repairs, or emergency travel. Upstart provides borrowers with quick and convenient access to the financial support they need by streamlining the funding process.
Cons of Upstart:
One of the notable drawbacks of Upstart personal loans is the origination fee, which can be as high as 12% of the total loan amount. This fee is deducted upfront before the borrower receives the funds, meaning that the actual amount disbursed may be significantly lower than the approved loan amount. For example, if a borrower takes out a $10,000 loan with a 10% origination fee, they would receive only $9,000, while still being responsible for repaying the full $10,000 plus interest. This added cost can make borrowing more expensive compared to lenders that do not charge origination fees or have lower fee structures. Potential borrowers should carefully consider this fee when determining the overall affordability of their loan.
Upstart offers personal loan repayment terms of either three or five years, which may not provide the flexibility that some borrowers seek. In contrast to lenders that offer a wider range of term options, such as shorter durations for those who want to pay off their debt quickly or longer terms for lower monthly payments, Upstart’s fixed choices can be restrictive. Borrowers who prefer more control over their repayment schedule may find these limited options inconvenient. Those needing a shorter or longer timeframe to align with their financial situation may have to look for alternative lenders that provide more specific repayment plans.
Overview of Discover Personal Loan
| Pros | Cons |
|---|---|
| No Origination Fees | Higher Credit Requirements |
| Flexible Repayment Terms | No Co-Borrower Option |
| Direct Payment to Creditors | Lower Maximum Loan Amount |
Pros of Discover:
A main advantage of Discover personal loans is the absence of origination fees. As opposed to some lenders that deduct a percentage of the loan amount before disbursing funds, the American company assures that borrowers receive the full approved amount. This feature makes it a cost-effective option, as borrowers do not have to worry about additional upfront deductions that could reduce their available funds. By eliminating origination fees, Discover allows borrowers to maximize the use of their loan without hidden costs, making it a more transparent and borrower-friendly lending option.
Discover provides borrowers with a broad range of repayment terms, spanning from 36 to 84 months. This flexibility allows individuals to tailor their repayment schedule according to their financial needs and budget. Those looking to minimize interest costs can opt for shorter terms, while borrowers who prefer lower monthly payments can choose longer repayment periods. This range of options ensures that borrowers have the ability to manage their debt in a way that aligns with their financial goals, making Discover a more accommodating choice compared to lenders with rigid repayment structures.
Discover simplifies the process by offering direct payment to creditors for individuals seeking a personal loan for debt consolidation. Instead of requiring borrowers to manually transfer funds to pay off outstanding debts, the company can handle the payments directly on their behalf. This not only saves time and effort but also reduces the risk of missed payments or delays. By streamlining debt consolidation, Discover makes it easier for borrowers to manage multiple debts efficiently, potentially improving their financial stability and credit standing.
Cons of Discover:
One of the main drawbacks of Discover personal loans is the high credit score requirement. Typically, applicants need a minimum credit score of 720 to qualify, which is significantly higher than what many other lenders require. This makes Discover loans less accessible to individuals with fair or average credit scores, limiting options for those who may need financial assistance but have a less-than-perfect credit history. Borrowers with lower credit scores may need to explore alternative lenders that have more lenient eligibility criteria or consider improving their credit score before applying to increase their chances of approval.
Another limitation of Discover personal loans is the inability to apply with a co-borrower. Many lenders allow applicants to add a co-borrower, which can enhance approval chances by combining incomes or leveraging a stronger credit profile. Without this option, individuals with lower credit scores or insufficient income may struggle to qualify on their own. This restriction can be particularly challenging for borrowers who rely on joint financial support, making it less suitable for those who might benefit from shared financial responsibility in securing a loan.
Discover’s maximum loan limit of $40,000 may be a drawback for borrowers seeking large loan amounts. While this amount is sufficient for many personal expenses such as debt consolidation, home improvement, or medical bills, it may not be enough for significant financial needs like extensive home renovations, major medical procedures, or business investments. Other lenders in the market offer higher loan limits, sometimes up to $100,000, giving borrowers more flexibility when larger sums are required. As a result, those needing a higher loan amount may need to look for alternative lenders with greater borrowing capacity.
How to Apply for an Upstart Personal Loan?
The simple application process for an Upstart personal loan is meant to provide you rapid access to money with the least amount of effort. The first step is to prequalify on its website. This involves filling out a short online form where you provide basic information about yourself, such as;
- Your name
- Contact details
- Loan amount you are seeking
Prequalification allows you to see potential loan offers without committing to a full application or impacting your credit score.
During the prequalification process, you will need to provide personal details, including:
- Your income
- Employment history
- Educational background
Upstart evaluates additional factors to determine your creditworthiness unlike traditional lenders that primarily focus on credit scores. This makes it a great option for individuals with limited or fair credit who may still have strong financial potential. You will also need to provide your Social Security number and agree to a soft credit inquiry, which does not affect your credit score.
Once your information is submitted, Upstart performs a soft credit check to assess your eligibility. Based on this assessment, you will receive a selection of loan offers with varying interest rates, loan amounts, and repayment terms. You can then review these options carefully and choose the one that best suits your financial needs. If you decide to move forward, you will need to complete the formal application process, which may require additional documentation, such as proof of income or identification.
If your application is approved, Upstart provides fast disbursement of funds, often within one business day. The approved loan amount, minus any origination fees, is deposited directly into your bank account. This quick turnaround makes Upstart an excellent choice for borrowers who need urgent financial assistance. However, it’s important to carefully review the loan terms and understand any associated fees before finalizing your decision.
How to Apply for a Discover Personal Loan?
The Discover personal loan application procedure is easy and organized to help customers in successfully receiving money. The first step is to prequalify, which can be done online through Discover’s website or over the phone with a loan specialist. During this stage, you will need to provide preliminary details about the loan you are seeking, including:
- Desired amount
- Loan purpose
- Repayment term
Then the prequalification allows you to check potential loan offers without committing to an application or affecting your credit score.
After you proceed past the prequalification stage, Discover requires more detailed financial information to assess your eligibility. You will need to provide details about:
- Your income
- Employment status
- Credit history
Discover has stricter qualification requirements unlike some alternative lenders, typically requiring a minimum credit score of 660 and a stable income to ensure borrowers can manage their loan repayments. These factors help the company offer competitive interest rates while minimizing risk.
After you officially apply, Discover conducts a hard credit check, which may temporarily impact your credit score. This step is necessary for this company to make a final lending decision and determine the terms of your loan. Depending on your creditworthiness, income level, and financial background, Discover will offer a loan amount and interest rate that align with your profile.
During the review process, a Discover loan specialist may contact you for additional verification. This could involve providing documentation such as recent pay stubs, tax returns, or bank statements to confirm your financial situation. While this extra step ensures responsible lending practices, it may slightly extend the approval timeline compared to lenders with fully automated processes.
If your application is approved, Discover disburses the funds within a few business days. Unlike some lenders that offer next-day funding, Discover’s process may take slightly longer, but borrowers benefit from the company’s no-fee structure and flexible repayment terms. The loan amount is deposited directly into your bank account, allowing you to use the funds for your intended purpose, whether it be debt consolidation, home improvement, or other financial needs.
Upstart vs Discover: Which Lender Should You Trust?
Your choice between Upstart and Discover should align with your credit profile and financial needs.
When should you pick Upstart?: Upstart’s inclusive criteria and quick funding might be advantageous if you have a lower credit score or limited credit history, despite potential origination fees and limited repayment terms.
When should you pick Discover?: Discover could be the more suitable option if you possess a strong credit profile and desire flexible repayment options without origination fees, keeping in mind its higher credit requirements and lower maximum loan amount.
Before deciding, compare rates, check eligibility, and read customer reviews. No matter which lender you choose, always borrow responsibly to maintain financial stability.
Discover Vs. Upstart Personal Loan Ratings
| Category | Discover ⭐ Rating | Upstart ⭐ Rating |
|---|---|---|
| Affordability | ⭐⭐⭐⭐☆ (4/5) | ⭐⭐⭐ (3/5) |
| Customer Experience | ⭐⭐⭐⭐⭐ (5/5) | ⭐⭐⭐⭐ (4/5) |
| Underwriting & Eligibility | ⭐⭐⭐ (3/5) | ⭐⭐⭐⭐⭐ (5/5) |
| Loan Flexibility | ⭐⭐⭐ (3.5/5) | ⭐⭐⭐ (3/5) |
| Application Process | ⭐⭐⭐⭐⭐ (5/5) | ⭐⭐⭐⭐⭐ (5/5) |
| Overall Rating | ⭐⭐⭐⭐ (4.2/5) | ⭐⭐⭐⭐ (4.0/5) |
Discover has tight requirements for credit and smaller loan limits, but it leads in affordability and customer experience since it offers no origination costs and flexible repayment plans.
Upstart stands out in underwriting and eligibility, making it more accessible to borrowers with limited credit history, though origination fees and limited repayment terms impact its overall rating.
Our Procedure
We at Lending Palm, take a complete, data-driven approach to evaluating personal loan products from various financial institutions and fintech companies. Our expert analysts gather and verify key data points, cross-checking lender websites, earnings reports, and public documents to ensure accuracy. We may also go through a lender’s pre-qualification process and speak directly with company representatives to gain deeper insights.
Our star ratings focus on consumer-friendly features, rewarding lenders that offer:
* Soft credit checks for pre-qualification
* Competitive interest rates and zero or low fees
* Transparent terms with no hidden charges
* Flexible repayment options to suit different financial needs
* Fast funding times for quick access to cash
* Accessible customer service for borrower support
* Reporting of payments to credit bureaus for credit-building benefits
* Financial education tools to help borrowers make informed decisions
Lenders receive fewer points for practices that could make repayment difficult, such as high APRs (above 36%), inadequate underwriting that doesn’t assess a borrower’s ability to repay, and lack of credit-building support. Our expert editors conduct full reviews annually and update ratings throughout the year as needed. In contrast to many rating platforms, Lending Palm does not receive compensation for our star ratings, assuring unbiased, trustworthy recommendations.
FAQs: Discover Vs. Upstart Personal Loans
1. Which lender has lower interest rates?
Upstart may offer lower interest rates to borrowers with excellent credit and strong financial backgrounds. However, its maximum APR can be quite high, reaching up to 35.99%. Discover, on the other hand, has a lower maximum APR, making it a better option for those who qualify for its best rates.
2. Can I get a loan with bad credit?
Upstart is more flexible with credit requirements and considers factors beyond credit scores, such as education and employment history. This can increase the chances of approval for borrowers with lower credit scores. However, approval is not guaranteed, and applicants must still meet other eligibility criteria.
3. Does Discover charge hidden fees?
No, Discover is known for its transparent loan terms and does not charge origination, prepayment, or late fees. This makes it a cost-effective option for borrowers who want to avoid unexpected charges. Unlike some lenders, Discover ensures that borrowers only pay interest on the loan amount without additional fees.
4. How fast can I receive funds?
Upstart provides funds quickly, often within one business day after approval, making it a good choice for urgent financial needs. Discover, however, may take longer to process and disburse loans, sometimes requiring several days. The exact timing depends on the bank’s processing speed and the borrower’s verification process.
5. Is Upstart a direct lender?
No, Upstart is not a direct lender but a lending platform that partners with banks and credit unions to issue loans. This means that while Upstart determines eligibility and loan terms, the actual funds come from its banking partners. Borrowers should check which financial institution is funding their loan before accepting the offer.
6. What credit score do I need?
Upstart does not have a strict minimum credit score requirement, but applicants with a score of at least 580 have better chances of approval. It also considers non-traditional factors like education and work history to assess creditworthiness. Discover, however, requires a minimum credit score of 660, making it more suitable for borrowers with good to excellent credit.
7. Can I use the loan for any purpose?
Yes, both Upstart and Discover allow loans to be used for various purposes, including debt consolidation, home improvement, medical expenses, and personal needs. However, borrowers should check with the lender to ensure their specific loan purpose aligns with any restrictions. Some lenders may have limitations on using funds for certain expenses, like tuition fees.
8. Do these loans affect my credit score?
Yes, applying for a loan with either lender will result in a hard credit inquiry, which may lower your credit score temporarily. However, making on-time payments and responsibly managing the loan can help improve your credit over time. If you are only checking rates, Upstart and Discover both offer a soft credit check that does not impact your score.
9. Can I pay off my loan early?
Yes, both Upstart and Discover allow borrowers to repay their loans early without penalties. This means you can make extra payments or pay off the entire balance before the loan term ends to save on interest. Early repayment can be a smart financial move if you have the means to do so.
10. Which lender is better for debt consolidation?
Discover may be a better choice for debt consolidation because it does not charge origination fees, reducing the overall loan cost. Additionally, it offers longer repayment terms, which can result in lower monthly payments for borrowers looking to manage multiple debts. However, Upstart may still be a good option for those with lower credit scores who need approval based on alternative factors.
