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Upstart Personal Loan Review: A Renewing Version of Online Loans

Looking for a personal loan without collateral ? Do you have decent or better credit ? Not sure you want to deal with the bureaucracy that you can find in a traditional bank? If so, you may be looking for an unsecured personal loan from Upstart, an online-only personal lender based in the San Francisco area.

Upstart issues fixed-rate personal loans to US-based borrowers who meet your criteria for credit, income, and employment. Well-qualified borrowers get rates as low as 7.35% APR, subject to change with prevailing interest rates and loan principal up to $ 50,000. Upstart is a peer-to-peer (P2P) lender that partners with third-party bank lenders to initiate loans financed by individual or institutional investors.

Unlike some competitors, Upstart projects a broad underwriting network, evaluating applicants’ educational achievement, study area, and employment history, in addition to more typical factors such as credit score and credit history . If you’ve had trouble qualifying for personal loans at other online-only lenders, Upstart is worth giving a try.

Let’s take a closer look at Upstart’s loans, loan process, benefits, drawbacks, and overall suitability.

Get a loan with Upstart

Upstart’s main product is an unsecured personal loan. Here is what you need to know about it.

Upstart loans: features and restrictions

Upstart issues unsecured loans with directors ranging from $ 1,000 to $ 50,000. In some jurisdictions, the minimum loan amount may be higher; for example, it is $ 6,000 in Ohio and $ 7,000 in Massachusetts. The maximum loan amount depends on your borrower profile, which includes credit factors such as credit score and history, and non-credit factors, such as work history and income.

The Upstart loan terms are 36 months (3 years) or 60 months (5 years). Origination fees range from 0% to 8% of the loan principal, depending on your borrower profile and the term of the loan. Your initial fee, if applicable, is deducted from your loan principal at the time of financing. Loan rates are fixed for the life of the loan and currently range between 7.35% and 35.99% APR.

If you choose to make additional principal payments or pay off your loan in full ahead of schedule, Upstart does not charge a prepayment penalty. Aside from the origination fee, the only common fees associated with Upstart loans are a late payment fee, which is the greater of $ 15 or 5% of the monthly late amount, which is charged on payments made more than 10 days later. of the monthly due date. and a $ 15 missed payment fee.

Upstart loans can be used to:

  • Refinancing Existing Student Loans
  • Debt consolidation
  • Pay off credit card debt
  • Financing of education expenses, including tuition.
  • Finance major projects such as improvements or additions to the home
  • Pay recurring or one-time bills, such as medical or car repair bills
  • Cover tax expenses (an alternative to paying taxes with a credit card)
  • Financing a major one-time purchase, such as a new car
  • Financing discretionary expenses, such as vacations or international weddings
  • Start or expand a business

Upstart loans aren’t one-size-fits-all. If you are unsure whether you can use an Upstart loan for a particular purpose, discuss it with a loan specialist.

Checking your loan rate

The first step in the Upstart loan application process is a quick rate check. Choose the purpose of your loan from the drop-down menu on the Upstart home page, then click “Check your rate.” On the next page, you will need to provide some details about your identity, employment, and finances, including:

  • Desired loan amount
  • Name and direction
  • Birthday date
  • Unique account phone number, email and password
  • Annual income from all the sources you want to share
  • Type of income (such as salary or hourly wage)
  • Employment history (employer, start date)
  • Educational level (highest grade)
  • Educational record (name of institution, field of study, graduation date)
  • Accumulated balances of checking, savings and investments accounts
  • New loans started during the previous three months, if any
  • Desired payment method (such as automatic debit or mailed check)

Checking your rate does not affect your credit score. However, if you wish to proceed with your application, you will need to consent to a strong credit draw that will temporarily lower your credit score.

Evaluation and acceptance of a loan offer

Once you submit your information, Upstart verifies your credit score and then issues an application decision. If you qualify to continue with the application process, you will see at least one loan option that offers a particular rate, term, and opening fee. Rates on 60-month loans tend to be lower than 36-month loans.

If you wish to continue, you will need to provide your Social Security number and verify the bank accounts you want Upstart to consider during the underwriting process. After applying, you may need to provide additional documentation, such as pay stubs or tax documents, so it is best to keep a close eye on your email and phone until your application is formally approved or rejected.

Upstart is distinguished by a proprietary underwriting process that takes into account a variety of non-credit factors, including your employment history, professional marketability as measured by your field of study, and educational achievements.

Upstart does not provide detailed information on its underwriting criteria, but its bias towards highly educated borrowers may well allow it to consider applications from potential borrowers whose credit scores or employment profiles would otherwise disqualify them. I’m just a tidbit, but I find it noteworthy that Upstart was unfazed, and indeed approved my application conditionally, when I listed my income type as “self-employed” and used the vague category of “means” to describe my duties. work. For many lenders, that is not enough.

Financing your loan

Upstart prides itself on prompt financing. If you agree to the terms of your loan before 5pm ET on a business day and Upstart encounters no problems during the verification process, you will receive your funds the next business day. If you accept after 5pm, you will receive your funds two business days later. The funds are deposited into the bank account of your choice, minus the agreed initiation fee.

Pay off your loan

Starting the month after your loan is financed, you will need to make regular repayments to the agreed fixed amount before the monthly due date. Repayments include principal and interest calculated on the total principal of the loan. Payment options include manual electronic payments, automatic electronic payments (automatic debits), and checks sent by mail. Payments are considered late after 10 days late. There is no penalty for rushing your payments or paying off your balance in full before your loan reaches term.

If you need to contact the Upstart team, you can call the toll-free customer service hotline at 855-438-8778 from 6 a.m. to 6 p.m. M. At 5 p. Mon, Pacific Time (9 a.m.-8 p.m. Eastern Time), seven days a week. After normal business hours, please email [email protected]

Advantages of obtaining an Upstart loan

  1. Innovative and inclusive underwriting process . Upstart’s underwriting process is more inclusive and innovative than the typical personal lender, P2P or not. In addition to common factors like credit history and credit score, Upstart’s proprietary underwriting engine takes into account the borrower’s employment history, educational level, and even study area, which, for better or worse, can significantly affect lifetime income potential. In other words, Upstart isn’t a one-size-fits-all lender, and that’s great news for borrowers who don’t fit the traditional mold.
  2. Fast financing . The vast majority of Upstart loans are financed in a single business day. If quick financing is important to you, and it may well be, if you’re using your loan proceeds for urgent purposes like debt consolidation, Upstart should be high on your list. Some competing lenders take up to a week to finance the typical loan.
  3. No prepayment penalties . You can cancel your Upstart loan at any time without incurring any financial penalties. This allows you to eliminate a recurring monthly expense, budget permitting, without paying more.
  4. Borrow up to $ 50,000 . Well-qualified upstart applicants can borrow up to $ 50,000 in a single loan. Loans from some competing lenders max out at $ 25,000 or $ 30,000. If you’re looking to consolidate debt or finance major purchases close to $ 50,000, Upstart’s high borrowing limit could make a difference. Just remember that you are not automatically eligible for a $ 50,000 loan from Upstart, and your borrower profile may limit your borrowing ability below that threshold.
  5. Some borrowers pay trivial origination fees . Upstart has a wide range of origination fees. On the positive side, well-qualified borrowers can qualify for origination fees below 1%, if origination fees are charged at all.
  6. Wide range of acceptable loan uses . By the standards of the online personal loan category, Upstart loans are suitable for a wider range of uses than usual. In particular, Upstart loans can be used to finance tuition and other educational expenses. Many competitors specifically exclude this app.

Disadvantages of getting an Upstart loan

  1. Potential for high origination fees . The other side of the coin to Upstart’s wide range of opening fees is the possibility of extremely high opening fees – up to 8% of the loan principal in the worst case. Upstart determines origination rates on a case-by-case basis and does not disclose precisely how they are calculated, but applicants with less than stellar credit or otherwise weak borrower profiles are likely to generate higher fees.
  2. Higher minimum APRs than some competitors . Upstart’s minimum APR is currently above 7%. That’s higher than some competing branchless lenders. Even small discrepancies in rates add up over time, so well-qualified borrowers may want to seek the lowest rate possible.
  3. Only two term options . Upstart has only two loan term options: 36 and 60 months. Traditional bank lenders can offer more flexible unsecured loan terms, while some branchless lenders, including Upgrade, offer lines of credit with a wider range of term options.
  4. Limited and confusing help portal . The Upstart help portal is not particularly helpful or user-friendly. In my experience, your search function seems quite delicate and selective. For example, a search for “origination fees” returned zero results, while a standard Google search for “upstart origination fees” returned an Upstart help article that mentions origination fees. I would recommend using your favourite search engine as a back door to the Upstart help library unless the information you are looking for appears among the few featured articles.
  5. Just a basic credit product . Upstart has only one basic credit product: an unsecured personal loan financed by P2P investors. With a fairly wide variety of accepted uses, the product is versatile enough, but its structure and terms are not particularly flexible. Some competing lenders offer unsecured personal lines of credit, which are better for borrowers with short-term working capital needs. Most traditional bank lenders also offer secured credit options , such as Home Equity Lines of Credit (HELOC) for borrowers with sufficient equity in their homes. 
  6. Not available everywhere . Beginner loans are not available in all states and availability is subject to change over time.

Final word

Unlike some competitors that only operate online, Upstart is a P2P lender that uses funds from individual investors to support its lending activities. The explosive growth of P2P lending this decade is just one example of the power of the sharing economy to fundamentally reshape the way we do business.

The people-driven economic reordering is far from over. In the coming years, we can look forward to many innovations that will make P2P lending look quaint. For now, let’s all celebrate how easy it has become to obtain a personal loan at a reasonable price.

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