Upstart Personal Loans Review: 2019

Upstart is a peer-to-peer online lender that uses artificial intelligence and machine learning with a variety of variables rather than FICO scores alone to determine who receives credit. 

Their selection process allows them to accept more borrowers and to lend higher amounts to borrowers with credit scores that wouldn’t qualify for as much money elsewhere. 

Upstart offers loans of $1,000 – $50,000 for a range of different purposes. Their loans come in 3- and 5-year terms and have no pre-payment penalty, meaning borrowers can pay loans off early without having to pay a fee. 

Upstart only lends to borrowers with credit scores of 620 and above. Upstart is known for paying the vast majority of their loans the next business day.

About the Company 

Dave Girouard, former president of Google Enterprise, founded Upstart in 2012. He continues to serve as the company CEO. Upstart is headquartered in San Carlos, California with additional offices located in Columbus, Ohio.

Upstart’s initial purpose was to lend money to people early in their careers who hadn’t yet had much opportunity to build credit. The intention was to assist borrowers as they built their careers or businesses by using additional factors such as educational attainment and job history as evidence they would be able to repay their loans. 

Over time, Upstart grew to lend to people in all stages of life for a wide variety of purposes. Currently, most of their borrowers are college graduates between the ages of 28 and 35.

In 2018, Upstart was on the Forbes Fintech 50, a list of the most innovative US financial tech companies. Upstart has originated over 303,000 loans worth a total of $3.8 billion. As of the end of 2018, 60% of all Upstart loans are approved through a fully automated process that does not require human intervention. 

In July 2019, CEO Dave Girouard testified before Congress about alternative data’s potential for bias in loan underwriting. In a related interview, he shared that while AI can have biases, he believes Upstart’s AI-based loan system is fairer than FICO-based loans. Girouard referred to the FICO score as “limited and backward-looking” because it excludes “millions of credit-worthy people.” Upstart’s goal is to include those people in the credit system.

This article will focus on:

Types of Upstart Loans

Upstart offers loans for more purposes than those offered by many other lenders. The terms and rates of each loan depend more on the borrower’s characteristics than on the purpose of the loan.

1. Refinancing

Refinancing loans allow borrowers to transfer debts to a different lender, usually for the purpose of lowering monthly payments, interest rates, or both. Refinancing can also be used to consolidate multiple sources of debt into a single loan, making loan payments simpler. Upstart offers refinancing and debt consolidation on student loans, credit cards, and other loan types.

2. Education

Education loans are useful for students attending college, graduate school, or another type of training program such as online courses or bootcamps. Upstart’s education loans are particularly helpful for people taking courses that don’t qualify for federal education loans or grants.

3. Large Purchases

Upstart allows borrowers to take out money for a large purchase such as a car. Other large purchases might include:

  • Motorcycles
  • Boats
  • Aircraft
  • Recreational vehicles
  • Other substantial items

4. Personal Expenses

Personal expense loans are available to cover a variety of expenses that aren’t considered large purchases, such as:

  • Taxes
  • Moving expenses
  • Weddings
  • Appliances
  • Furniture
  • Home improvement costs
  • Vacations
  • Medical bills
  • General bills
  • Rent

Some personal expenses may be considered emergency situations. It’s worth noting that Upstart is not a payday loan company. 

Payday loan companies are often predatory lenders that take advantage of borrowers in emergency situations, driving them deep into debt that is difficult to pay off. Their loans are notorious for their high interest rates. Unlike borrowers from these companies, Upstart’s borrowers generally save money on interest over putting debt on a credit card.

Other Purposes

Upstart also lends money for purposes not listed in their main categories. Other purposes might include starting or expanding a business, lending money to a family member, or to have a reserve of cash on standby.

If you want a loan for a purpose not listed here or on Upstart’s website, it doesn’t mean your loan won’t be approved. Upstart approves loans for such a wide variety of purposes that it’s worth filling out Upstart’s application form to see if you get an approval.

Upstart Personal Loans: Amounts, Terms, Rates, and Fees

Loan Amounts

Upstart’s loans are available in amounts ranging from $1,000 to $50,000. The amount you qualify for will depend on various personal characteristics and your loan purpose.

Loan amounts and terms can vary from state to state based on local laws. Upstart’s loans are not available to residents of Iowa or West Virginia. Also, the following states have loan amount minimums: 

  • Georgia: $3,100 minimum
  • Massachusetts: $7,000 minimum
  • New Mexico: $5,100 minimum
  • Ohio: $6,000 minimum

Terms

Upstart offers two loan term options:

  • 3 years (36 months)
  • 5 years (60 months)

Upstart will let you know if you have one or both loan terms as options after you apply for a loan.

Your amount due each month and the total amount of interest you pay will vary based on the term of your loan. Loans with a longer term will have lower minimum monthly payments but will cost more in interest over the course of the loan. 

Upstart does not charge a pre-payment penalty, so if you’re able to pay the loan off faster than the term specified, you will save on interest and not be charged a fee.

Rates

Upstart’s loans have a fixed interest rate that falls between 4.68% and 35.99%. Your interest rate is determined by multiple factors including your educational, work, and credit histories. Upstart’s loan calculator will help you understand how your payment and interest amounts vary depending on your loan term, interest rate, and fees.

Fees

Upstart does not charge a pre-payment penalty, which is a fee for paying off your loan early. They do charge various other fees, however:

  • Origination fee: Not all borrowers are charged an origination fee, which is an initial fee charged for taking out the loan. Origination fees range from zero to eight percent of the total loan amount. 
  • Late payment fee: Each time you submit your payment after the due date, you will be charged $15 or five percent of the monthly past due amount, whichever is greater.
  • ACH return or check refund fee: If your ACH bank payment or check payment fails due to insufficient funds or for any other reason, you will be charged $15. This charge will apply each time your ACH or check payment fails to clear.
  • Paper copy fee: Upstart operates primarily online. If you want to request paper copies of your records, it will cost you $10.

Time to Funding

Upstart pays the vast majority of its loans the next business day after a borrower applies. Education loans require a three-business-day waiting period, however, due to federal law.

Upstart Loan Requirements

Upstart has a reputation for approving more borrowers than traditional lenders because of their reduced emphasis on the FICO score.

Typical Credit Scores

Upstart only lends to borrowers with a FICO score of 620 or above. The majority of Upstart borrowers have FICO scores ranging from 620 – 730. 

Upstart welcomes borrowers who might have trouble finding a loan elsewhere. Although they do not divulge every factor that goes into their approval process, borrowers with college degrees and prior work histories likely have an advantage. 

Pre-Application Soft Credit Check

Initially, Upstart has applicants fill out a soft credit check form only, meaning the inquiry will not affect your credit score. Upstart also requires the following information in a borrower’s initial application: 

  • Desired loan amount
  • Intended loan purpose
  • Name, birth date, address, and phone number
  • Highest level of education
  • Primary source of income
  • Total of funds in checking accounts, savings accounts, and investments
  • Whether or not you’ve taken out loans in the past 3 months
  • How many other loans you’re currently applying for

If the initial soft inquiry determines you will likely be approved for the loan, Upstart will present estimated loan rates and terms to you before you move on to the formal application.

Formal Application Hard Credit Check

If you are satisfied with the results of the soft credit inquiry and want to move forward with obtaining an Upstart loan, a hard credit check is required. 

A hard credit check provides Upstart with your full credit history. This check will show up in your credit history and can remain there for up to two years. An excessive number of hard credit checks can affect your borrowing ability by giving the impression that you are having financial difficulties and are in need of funds.

Payment Dates

Upstart’s first payment due date is generally 20 to 40 days after the origination of the loan. Payments are then due every month thereafter until the loan amount is paid off. Upstart allows borrowers to split payments into two monthly installments. However, they do not allow borrowers to change their monthly payment due date.

Early and Additional Payments

Upstart does not charge any pre-payment penalties, which means you may make payments early, make additional payments, or pay an amount beyond what is due in a given month without facing any extra charges. If you can afford to pay your loan off early or make payments that are larger than the minimum, you will save money on interest in the long run.

Upstart Customer Support

Phone

Upstart has two numbers to use for contacting customer support by phone:

  • (650) 204-1000 (local)
  • (855) 438-8778 (toll-free)

Upstart’s phone support is available at the following times: 

  • Monday – Friday (excluding holidays): 6 a.m. – 5 p.m. PST
  • Saturday – Sunday: 6 a.m. – 5 p.m. PST

Email

Upstart handles customer support communications via email at support@upstart.com. 

Customer Feedback

Upstart has been accredited by the Better Business Bureau (BBB) since 2015 and has an A+ BBB rating as of July 2019. 

Upstart has a 96% “excellent” rating on TrustPilot. Over 4,500 people have provided reviews and given Upstart a 5-star average. Customers wrote that Upstart’s “process was quick” and that Upstart “made it easy and affordable” to take out a loan.

Summary

Pros

  • High customer ratings
  • Wide variety of loan purposes
  • Ability to fund more borrowers than traditional lenders
  • Quick loan disbursement time
  • No pre-payment penalty

Cons

  • Does not lend to borrowers with FICO scores below 620
  • Not available to residents of Iowa or West Virginia

Upstart is a profitable financial tech company potentially revolutionizing lending through the use of AI technology. 

Upstart’s loans are a good option for people in the 620 – 730 FICO score range who have a work history and higher educational attainment. Upstart generally provides funds in one business day, and they do not charge a pre-payment penalty, making them an attractive option for many borrowers.

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