Upstart Personal Loans Review of March 2024

ElitePersonalFinance
Last Update: July 11, 2023 Loan Reviews

Upstart in a nutshell

Upstart offers personal loans even for people with insufficient credit history. They are one of the biggest names in personal loans. Here is what we can say about their target.

  • People with FICO score at least 300.
  • People with short credit history can apply.
  • Upstart considers other factors such as education, employment, and income when approving loans, even if your credit history is not OK.
Loan Amount:$1,000 – $50,000
APR:4.6% – 35.99%
Min. Credit Score:300
Approval:1 – 7 Days
Terms:3 – 5 Years
Fees:
  • Loan origination fee of 0% – 12%
  • Late payment fee of 5% of the amount due, or $15, whichever is greater, after a 15-day grace period
  • Insufficient funds fee of $15
  • Paper documents fee of $10
  • There are no prepayment fees
Qualification Criteria:
  • Minimum age: 18
  • Residing in the United States (don’t have to be a citizen or permanent resident) (exception for military)
  • Minimum credit score of 300 in most states
  • No bankruptcies or public records on your credit report
  • No accounts that are currently in collections or delinquent
  • Living in the 50 US states
Average Borrower Profile:
  • Borrows roughly $8,600.
  • Incurs an APR of 23.98% on a five-year term
  • Achieves approval nearly twice as often than traditional lenders with a FICO Score of 620 to 660
  • The CFPB found Upstart’s AI risk model approves 27% more borrowers and they incur APRs 16% lower than traditional lenders
Best For:Low credit scores, high DTI ratios
Check rates

Terms: Your loan amount will be determined based on your credit, income, and certain other information provided in your loan application. Not all applicants will qualify for the full amount. Minimum loan amounts vary by state: GA ($3,100), HI ($2,100), MA ($7,000).

Although educational information is collected as part of Upstart’s rate check process, neither Upstart nor its bank partners have a minimum educational attainment requirement in order to be eligible for a loan.

The full range of available rates varies by state. A representative example of payment terms for a Personal Loan is as follows: a borrower receives a loan of $10,000 for a term of 60 months, with an interest rate of 18.44% and a 8.64% origination fee of $864, for an APR of 22.88%. In this example, the borrower will receive $9136 and will make 60 monthly payments of $257. APR is calculated based on 5-year rates offered in March 2023.  Your APR will be determined based on your credit, income, and certain other information provided in your loan application. Not all applicants will be approved.

If you accept your loan by 5pm EST (not including weekends or holidays), you will receive your funds the next business day. Loans used to fund education related expenses are subject to a 3 business day wait period between loan acceptance and funding in accordance with federal law.

While most loans through Upstart are unsecured, certain lenders may place a lien on other accounts you hold with the same institution. It is important to review your promissory note for these details before accepting your loan.

When you check your rate, we check your credit report. This initial (soft) inquiry will not affect your credit score. If you accept your rate and proceed with your application, we do another (hard) credit inquiry that will impact your credit score. If you take out a loan, repayment information may be reported to the credit bureaus.

The APR calculation compares the two models based on the average APR offered to borrowers up to the same approval rate. The hypothetical credit-score only model used in Upstart’s analysis was developed in connection with the CFPB No Action Letter access-to-credit testing program and was built from a traditional credit score only model trained on Upstart platform data. APR for the scorecard was averaged for each given traditional credit score grouping.

While automated recurring payments are easy to set up, payments by check or one time electronic payments can also be used to repay a loan. Borrowers have the flexibility to choose the repayment method that works best for them.

This information is based on actual borrowers as of 4/1/2023 who identified “credit card refinancing” as their primary use of funds and paid off at least 51% of their outstanding credit card debt within 3 months of taking out the loan. Out of these actual borrowers, some could have experienced an increase or decrease in their credit score. This information reflects the overall average change in credit score points experienced by this group of borrowers as identified above.

The majority of borrowers on the Upstart marketplace are able to receive an instant decision upon submitting a completed application, without providing additional supporting documents, however final approval is conditioned upon passing the hard credit inquiry. Loan processing may be subject to longer wait times if additional documentation is required for review.

The Best Option for Young Millennials

If you are a young millennial, you’ve probably been denied loans several times due to your insufficient credit history. Most lenders rely on FICO scores to determine credit eligibility, and since most young millennials lack enough credit history, they are locked out.

For the record, the FICO score considers the borrower’s payment history, length of credit history, types of credit used, the current level of indebtedness, and new credit accounts.

Upstart Loans addresses this challenge by considering other metrics that favor young millennials entering the job market. These include education, the area of study, ACT scores, GPAs, employment, and income.

In a snapshot, the following questions may arise when applying for a loan with Upstart.

  • Did you complete your college education?
  • What is your area of study?
  • What is your college GPA?
  • What are your SAT scores?
  • Do you have a regular and verifiable source of income? (must be above $12,000 per year)
  • Do you have a job? (both full-time and part-time employment may be considered provided you show a job offer letter)

For borrowers with a credit history, the FICO score must be at least 620.

Background Information

One thing that makes Upstart fit for young borrowers with a bright career future is its dedication to uplifting talents.

In fact, with this lender, you can be considered for a loan if you prove that you will use the proceeds to acquire technical skills that will dramatically increase the chances of getting a well-paying job.

Perhaps the obsession with young people with promising careers comes from the founder’s and investors’ backgrounds.

The platform was founded in 2012 by Anna M. Counselman, Dave Girouard, and Paul Gu, all ex-Google employees. The leading investors include Mark Cuban, the Shark Tank tech entrepreneur, and Google.

Created by tech gurus, Upstart relies on cutting-edge technologies such as AI and Machine Learning to assess borrowers’ qualifications. The lender approves loans within one day for credit card refinancing and three days for education loans. This makes the loan approval process highly accurate and faster than the traditional manual approach.

  • Founded by ex-Googlers.
  • It relies on cutting-edge technology in AI and Machine Learning to approve loans.
  • Approves loans within one to three days of application.

Loan Rates and Terms

You can borrow between $1,000 to $50,000 at a fixed APR of between 4.6% – 35.99%. The lender claims that their rates are 23% lower than those of other lenders.

While we cannot ascertain this statement’s truthfulness, we can confirm that Upstart rates are within the industry average. This is a great thing, given that this is among the most accessible and flexible lenders in the industry.

However, before you decide to settle on this lender, it is essential to explore the rates and terms provided by other lenders. We will be offering credit card comparisons, so subscribe to get notified when this becomes available.

Like most lenders, Upstart Loans charges a loan origination fee between 0 and 8%. While these charges put off many new borrowers, they are a standard in the industry, meaning that you may not be able to avoid them.

Please note that an origination fee is charged upfront on the principal. Therefore, make sure that you borrow enough to cover the cost. Upstart Loans does not provide specifications on when a borrower is likely to incur zero origination fees.

  • The amount is between $1,000 and $50,000.
  • Rates are 23% lower than those of other lenders.
  • Loan origination fees of between 0 to 8%.

Penalties and Other Fees

Upstart Loans charges a late payment penalty of 5% of the unpaid amount or $15. If your payment checks bounce, the lender imposes a fee of $15 per returned check.

However, unlike its competitors, Upstart does not charge a fee for check payments. Also, with this lender, you do not incur any penalties for making early payments.

  • Late payment penalty of 5% of the unpaid amount or $15.
  • Insufficient funds penalty of $15 per returned check.
  • No pre-payment penalties.
  • Zero fees for check payments.

Repayment Schedule

Upstart requires its borrowers to make monthly repayments, including interest, and a part of the principle. The lender’s easy-to-use loan calculator helps you determine the amount to pay, including the applicable fees.

The repayment period is between 36 months and 60 months. The lender provides the borrowers with tips to help increase their credit score, which is necessary for lowering the cost of loans.

  • Monthly payments to include principal plus interest.
  • A loan calculator to help borrowers determine the payable amount.
  • A repayment period of between 36 to 60 months.
  • Tips to help reduce the cost of loans.

Is Upstart Loans Safe?

Upstart has been BBB accredited since 2015 and has an A+ rating. The loans provided by this lender are funded by Cross River Bank, an FDIC-insured New Jersey commercial bank.

The Upstart Loans website is encrypted, meaning that customers’ information is out of reach for hackers.

Another critical thing is that this lender does not share customer information with other parties. This means that you are guaranteed not to receive annoying emails with unsolicited offers when registering with Upstart.

  • BBB accredited.
  • FDIC Insured loans.
  • Encrypted websites.
  • Do not share customer information with other parties.

Other Advantages

Another significant advantage of Upstart Loans is that they conduct a soft inquiry when checking the borrower’s credit.

Unlike a hard inquiry, a soft inquiry does not adversely affect your credit score.

Conclusion

Upstart Loan is a great option, especially for borrowers without sufficient credit history. The lender claims to provide the best lending rates and terms compared to competitors. In our own view, this credit provider is worth a try, especially for young millennials entering the job market.

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