Upstart Reviews – What to Expect and Is it Worth it?
Upstart is an online platform that partners with banks and private investors. They provide personal loans to borrowers with short credit histories but regular income and high earning potential. Most of the Upstart reviews online are positive. Their personal loans can be used for a variety of purposes. Uses include debt consolidation, medical expenses, home improvements and college tuition. According to the company, most borrowers use their funds to consolidate debt.
The website explains that Upstart’s underwriting helps younger applicants with no credit history qualify for a loan. The company believes their qualification parameters accept a greater number of borrowers. But, without experiencing a higher default or payment delinquency rate. They are able to manage risk by focusing on a borrowers earning potential rather than credit history. The company uses machine learning models to assess factors such as college degrees, area of study and job history when reviewing loan applications.
Automated Loan Algorithm
Upstart is unique as an online lender. The company was founded by former Google executives in 2012. They claim to be the first lending platform to use artificial intelligence to automate the lending process. The company takes pride in offering loans to a wider range of consumers. Since 2012, Upstart has originated over $3.2 billion with the majority approved using their automated algorithm.
Most lenders focus on credit history and FICO score when approving you for a personal loan. Upstart uses automated technology to quantify risk. Upstart believes they can use a more intuitive credit model to approve twice as many borrowers without increasing defaults. As a result, Upstart has been able to offer high-quality personal loans with low rates and fair terms. And, these loans are attainable to borrowers with less than perfect credit. Online Upstart reviews score mostly five-star from users on TrustPilot. Many of their applicants get their loans funded as soon as the next business day.
Upstart Reviews: Personal Loans at a Glance
- Personal loan amounts – are available in amounts between $1,000 and $50,000.
- Repayment – Repay your loan over three or five years.
- Interest Rates – Fixed interest rates are offered between 7.54% and 35.99%.
- No Hard Inquiry – Checking your rate on Upstart will not affect your credit score.
- No prepayment penalty – These loans come with no prepayment penalty. However, you may have to pay an origination fee of up to 8% of your loan amount.
- Minimum Credit Score – You’ll need a minimum credit score of 620 and minimum annual income of $12,000 to qualify.
Upstart Personal Loans Review
There are many reasons to consider a personal loan from Upstart. It all starts with the unorthodox way this lender approves consumers for personal loans. Upstart looks at more than just credit scores to approve you for a loan. They include non-conventional variables. Things like the number of hard inquiries on your credit report, whether you have a college degree, and your earning potential.
Upstart looks at a broad number of factors when approving you for a loan. This can make the process easier if you have only average to below par credit. You just need any score at or close to the 620 minimum. However, Upstart does require you to have no bankruptcies or delinquent loans. You may also need to submit additional information to qualify if your credit isn’t great. For a student, it might include SAT scores, information on your area of study, or detailed employment information.
Upstart lets you borrow up to $50,000. This might be for debt consolidation, a wedding, a home remodeling project, or nearly any other reason. Many lenders only offer personal loans in amounts up to $35,000 or less. The higher limit can be a huge benefit if your requirements are higher.
Upstart also offers flexible repayment terms. They offer th option to repay your loan over three years or five years. Their loans also come with no prepayment penalties and no hidden fees. It is good to know you can pay your loan off early – with no penalties to do so.
Upstart offers fixed-rate personal loans only. Variable-rate loans are not available. Loan amounts range from $1,000 to $50,000, but some states have higher minimums. Repayment terms are three or five years. Borrowers can expect to receive the funds within two business days after accepting the terms of the loan. The only exception is if you plan to use the loan for education-related purposes. In that case there’s an additional waiting period of three business days. Borrowers can receive the cash with a direct transfer to their bank account. Upstart charges an origination fee of 0% to 8% of the loan amount. The lender charges a late fee of $15 or 5% of the amount past due, whichever is greater. There is no prepayment penalty if you pay off the loan early.
- Origination Fees – Upstart charges an origination fee of up to 8 percent of the loan amount. This is higher than many online lenders. The origination fee is deducted off the top from your loan funds before you receive them. Therefore, it’s important to borrow enough to ensure you get what you need to cover your requirements.
- Late Fees – The lender charges a late fee of 5% of the past-due amount ($15 minimum). The late fee kicks in 10 calendar days past your due date.
- Check Return Fees – There’s also an ACH return or check refund fee of $15 if a payment from your bank account or by check is returned due to insufficient funds.
Better Business Bureau Rating
Upstart has an A+ rating with the Better Business Bureau. In 2018, the Consumer Financial Protection Bureau received five personal loan-related complaints about Upstart. Issues were mostly related to getting a loan and unexpected interest and fees. Upstart provided a timely response to the CFPB for all complaints, with all five closed with an explanation.
- In general, the entire loan process can be completed online, including preapproval, application, closing and account management. In some cases, however, Upstart performs verifications by phone. According to the website, “Automation and modern data science can speed up the verification process. This allows Upstart to approve over 50% of loans nearly instantly.” If you have questions, you can reach Upstart’s customer service team by email or phone.
- Additional Features Upstart provides borrowers with a financial fitness dashboard. This allows them to keep track of their credit score while they make payments on an Upstart personal loan. You can receive the loan funds within two business days after you accept the loan.
- What to do if you’re turned down If you apply for an Upstart personal loan and don’t get approved, consider calling the lender to get more information on the reasoning behind the denial. If it’s based on your too-low credit score, you may be able to get approved with other lenders that have lower minimum requirements. Also, check with your local bank or credit union for more options.
Upstart Reviews – The Not So Good
The common complaint with Upstart is the fact they may charge an origination fee of up to 8% of your loan amount. This fee amount can represent huge costs for the borrower. Also, Upstart personal loans are not available in West Virginia or Iowa. If you live in one of those states, you’ll need to shop for a personal loan with a different lender.
“Paying up to 8% of your loan amount in an origination fee is pretty much unprecedented in the personal loan space. Many of the best personal loans don’t charge an origination fee at all, and even the lenders who do tend to limit them to 5% or 6% of your loan amount. Another downside of Upstart is the fact their minimum interest rate starts at 7.54%. That’s considerably higher than some other personal loan companies that offer interest rates as low as 5.99% for borrowers with excellent credit. With an example loan of $17,800, you’re expected to pay an origination fee of over 5% plus an APR of 29.75%. Over the lifetime of this loan in its present form, you would wind up paying $17,484.45 in interest if you wrapped the origination fee in your loan amount — almost as much as the loan itself.” Source: thesimpledollar.com
How to Apply for a Personal Loan from Upstart
When taking out a personal loan, it’s always smart to compare rates from multiple lenders. You will be making payments for 3-5 years, so find a loan that fits your budget. Remember to factor in any fees, and keep in mind that the repayment term will also affect your monthly payment. A shorter repayment term usually results in lower rates offered by most lenders. But a shorter term also results in higher monthly payments. Before you apply for an Upstart personal loan, it’s useful to know the minimum qualification requirements. The following is a list of requirements before you apply:
- Permanent US Address – Have a permanent street address in the U.S. (unless you’re active duty military)
- West Virginia and Iowa residents are not eligible to apply. All other states are eligible.
- Minimum Age – Be at least 18 years old in most states or at last 19 in Alabama and Nebraska
- Email – DOB – SSN – Valid email account, name, date of birth, and Social Security number
- Verifiable Employment – Have verifiable employment or a full-time job offer that starts within six months
- Valid U.S. bank account
- Minimum credit score of 620
Upstart’s application process is relatively simple. You start by providing the basic details about yourself and register to get a rate quote. The lender does a soft credit check for this part of the process, which means the inquiry won’t impact your credit score. If the quote looks good, you will be asked to review the information. At this point, you will add your Social Security number and bank account information and finalize the application. Once you submit the official application, Upstart will run a hard credit check, which can knock a few points off your credit score. Before you apply, though, compare the rate quote you receive with other personal loan rates from top lenders.
“Upstart’s online portal makes applying for a personal loan easy and convenient. It all starts with getting “pre-qualified for a loan” through their interface, which you can do after submitting information such as your name, income, employment details, address, phone number, and email address. Once you’re pre-qualified, you can decide whether you like the loan terms you were offered. If you do, you can move forward by completing the application with your Social Security number. If you’re approved for a personal loan, you may receive instant notification verifying your new loan details. You may also have your loan funded with an automatic deposit in your bank account as soon as the next business day.”
“Our proprietary underwriting model takes into account a borrower’s education and job history,” says Penner. “This helps us understand her future potential and may allow the borrower to get a lower rate, even if she has limited credit and/or employment experience.” If you currently have an Upstart personal loan, you must have made on-time payments for the previous six consecutive months, have no more than one outstanding loan with Upstart and have no more than $50,000 in loans from Upstart, including the new loan. Upstart does not accept co-signers” Source usnews.com
Upstart makes applying for a personal loan easy. Here’s how it works:
- Apply online. Upstart loans will conduct a “soft credit check” that will not impact your credit score.
- Once you’ve submitted your basic info, your rate will be determined by your credit score, education history, and work experience. The loan term could also affect your rate and the total amount you pay. A loan with a longer term costs more in the long run: Your monthly payment will be lower, but you’ll be paying interest for a longer period. If you want to pay as little interest as possible, you should opt for a shorter-term loan if you can afford the monthly payments.
- If you’re satisfied with the rate offered, you can submit a full application. A hard inquiry will be made to verify the accuracy of your financial information, and this generally lowers your credit score by a very small amount. You can submit the application online, and you’ll need to provide Upstart with basic information, including your Social Security number and some details about your academic background, career, and other creditors.
- Most borrowers get a decision right away, unless they’re asked to submit additional documents such as college transcripts. Once the loan has been approved, you may obtain your personal loan funds within one day. Source: fool.com
Upstart Reviews – Should You Get a Personal Loan from Upstart?
If your credit isn’t perfect or you have a thin credit profile, Upstart can make a lot of sense. This lender will consider more than your credit score when assessing you for approval. This can help you get the money you need even if your credit is below par.
However, Upstart is not known for offering the lowest rates or best loan terms available. If you want to end up with the most affordable personal loan – and you have good credit, it’s crucial to shop around and compare loan rates, terms, and fees. There may be better rates out there if you have good credit. You’ll just need to do some legwork to find the best alternative.
Who Upstart Personal Loans are Best For
- Consumers with decent or good credit who can qualify for a loan with the best rates and a low origination fee.
- Anyone who cannot qualify for a personal loan with no fees.
- People who need to borrow up to $50,000 for any reason and pay it off in up to five years.
Upstart Personal Loans – Summary
Upstart is an online marketplace lender that connects borrowers and investors to originate personal loans. It offers loans of up to $50,000 to borrowers with fair-to-excellent credit nationwide. There are three major criteria you need to meet in order to qualify for a personal loan through Upstart:
- Credit score: If you don’t have enough information in your credit history to generate a credit score in the first place, you might still be eligible. However, if you do have a credit score, eligibility requirements include a credit score of at least 580
(in most states).
- Employment: You’ll need a regular source of income or be able to demonstrate that you have a job offer starting within the next 6 months.
- Residency: You need to be a U.S. citizen or U.S. resident, and you can’t live in West Virginia or Iowa (where loans on Upstart aren’t available).
The Fine Print
- Loan amounts and interest rates – Upstart is a good option of you are employed with a good salary. Even if you don’t have much of a credit history to refer to, or less than perfect credit. You could still be eligible to borrow between $1,000 and $50,000. But, if you need to borrow more than $50,000, there are some lenders who offer personal loans up to $100,000. Unfortunately, Upstart is not one of those lenders. Upstart reports that the average APR on a three-year loan offered through its platform is 21%.
- Fees – Like other lenders who offer personal loans, Upstart charges an origination fee. This can be anywhere from 0% to 8% of the loan balance. It depends on your credit report and state of residence, and other fees. Fees charged by any lender will be reflected in your annual percentage rate (APR).
- No Prepayment Penalties – The good news is that Upstart does not charge prepayment penalties. So if you want to repay your entire loan balance ahead of time, you won’t have to pay any extra fees.
- Fast loan approval – Once you accept your loan, Upstart says it can put the money right in your bank account as soon as the next business day after approval.
- Repayment – You can make your monthly payments electronically, either by authorizing automatic withdrawals from a bank account or by making electronic payments manually. You can also send checks by mail.
Upstart Reviews – Best Features
- Wide range of loan options: You can borrow between $1,000 and $50,000. Upstart offers some of the best personal loans for people looking to borrow as little as $1,000.
- Fixed-rate interest: Interest rates are fixed, so your rate and payment won’t change over the life of the loan.
- Repayment options: You’ll have a choice of a three-year or five-year repayment term.
- Early payoff potential: There’s no prepayment penalty, so you can pay Upstart personal loans off early without incurring fees.
- Perfect Credit not Required – Upstart may accept applicants with fair credit or even those with no credit history.
- Online Tools – The lender offers a credit dashboard and other tools to see the impact of loan repayments.
Upstart Reviews – What could be improved
- Interest rates: If you don’t qualify for the lower end of Upstart interest rates (which start around 6.53%), you could pay as much as 35.99%. This is one of the highest interest rates in the personal loan market and doesn’t make sense if you’re consolidating credit card debt.
- Origination fees: Upstart charges an origination fee of up to 8% on its personal loans. Again, this is one of the highest origination fees on the market.
- Not Available in Every State – Loans are not available to Iowa or West Virginia residents.
- Co-signers are not accepted.
Upstart Personal Loans – Final Words
Upstart offers fixed-interest-rate personal loans that you can use for almost any purpose. Whether you’re consolidating debt or making a big purchase. Provided you have a reasonable credit score and meet other requirements, Upstart is worth a look. There are some some big advantages, including fast funding and flexibility in the amount you can borrow. The minimum loan amount is below lower than many lenders. This makes Upstart an ideal choice for borrowers who need only a small amount of money. However, Upstart’s interest rates are higher than some of those that might be available. So, you should shop around to make sure you’re getting the lowest-cost loan you can qualify for.