Upstart vs. American Express: Which Personal Loan Is Right for You?
Updated: July 25, 2023
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When exploring the differences between Upstart and American Express, MoneyGeek found that Upstart uses artificial intelligence (AI) for loan approvals instead of a FICO-based model. As a result, those with poor credit scores can qualify for a personal loan.
On the other hand, American Express started out as a freight forwarding company before evolving into a payment card company. In addition to credit cards, it offers personal loans to eligible cardholders.
MoneyGeek’s guide provides up-to-date information about these two lenders to help you compare them and choose the best one for your particular needs.
Upstart vs. American Express: Overview
Upstart and American Express offer personal loans for individuals who need quick access to funds. However, the best lender for you depends on your particular situation.
For instance, Upstart is great for borrowers with a credit score of 300 and above. It’s also ideal for those who need a wider range of funding amounts.
Meanwhile, American Express is ideal for Amex cardholders who prefer a lower APR range for their personal loans, more flexible repayment terms and require funds on the same day as application approval.
Upstart
American Express
APR Range
The annual percentage rate (APR) measures the amount of interest charged to borrowers each year for a loan. It takes into account fees such as origination fees, closing costs, mortgage insurance and more.
APR varies widely across personal loan lenders. Between Upstart and American Express, the latter has a smaller APR range, which is an important consideration when choosing a lender.
You’ll want to secure a low rate as it reduces your loan’s total cost. You will also pay less in interest and fees over the life of your loan. However, to get a low rate, you need an excellent credit score. Note that your loan’s size, type and terms also influence the rate you’ll receive from your lender.
When comparing APR ranges between Upstart and American Express, the latter has the competitive edge in this match-up. With lower minimum and maximum APRs, American Express is a better choice for borrowers looking to get the best interest rates possible.
That said, APR ranges shouldn’t be your only focus when researching loans. It’s advisable to look into a lender’s loan amount, repayment terms, credit score requirements and funding time when determining the best option for you.
Minimum Credit Score
Your credit score is vital when qualifying for a personal loan. Generally, lenders require a fair credit score, which is a score between 580 and 669. However, some lending companies accept applicants with bad credit and even those with insufficient credit history.
Upstart, in particular, allows borrowers with a minimum credit score of 300 to apply for its personal loans. This is because Upstart doesn’t fully rely on credit scores when evaluating loan applications. Instead, it uses AI to decide who is approved for a personal loan. On the other hand, American Express requires a minimum credit score of 660.
It’s beneficial to have a good credit score when applying for a personal loan. You’ll qualify with more lenders and potentially secure lower interest rates. As a rule of thumb, avoid making late payments since these can negatively affect your credit score.
Because of its AI-based underwriting model, Upstart has a more flexible credit score requirement than American Express. In fact, the former goes beyond credit scores and uses other variables to evaluate loan applications instead.
It’s worth noting, however, that borrowers with bad or no credit are often subject to higher APRs and less favorable loan terms. As such, you should make sure that your chosen lender’s terms and conditions suit your needs before pursuing a loan application.
Loan Amount Range
The loan amount range refers to the minimum and maximum amount a lender offers for a personal loan. How much you can borrow varies depending on the lending company you choose.
Although both lenders cater mostly to borrowers with small expenses, Upstart has a more favorable loan amount range than American Express. With the former, you can borrow $1,000 to $50,000, while the latter’s personal loans start at $3,500 and are capped at $40,000.
When choosing a personal loan lender, it’s important to consider its loan amount limits along with other factors. This way, you can ensure that it has the ability to meet your specific needs.
With personal loans ranging between $1,000 and $50,000, Upstart has a more flexible loan amount range than American Express. That said, both lenders are great options for individuals who need a personal loan to pay for smaller expenses.
It’s crucial to know how much money you need before shopping around for a personal loan. You’ll want to avoid borrowing too little or too much for the intended use of the loan.
Also, make sure to evaluate other factors that play into your loan to ensure you choose a lender that meets all your funding needs.
Repayment Terms
A personal loan’s repayment term refers to the amount of time you have to pay it back. Upstart offers repayment terms between 36 and 60 months, while American Express offers repayment terms ranging from 24 to 84 months.
You usually have the option to choose how long you have to pay your personal loan back. A longer repayment term may seem more attractive because of the lower monthly payments, but it has its drawbacks, including a higher interest rate. Even if you have a low APR, you’re still likely to pay more in interest over the life of your loan.
Although repayment terms are an important consideration when choosing a personal loan lender, remember to pay attention to other factors as well.
American Express offers loan repayment terms from two to seven years, granting borrowers more flexibility in the amount of time they have to pay back their personal loans. This gives the lender a competitive edge over Upstart, which only offers repayment terms of 36 to 60 months.
Before pursuing a loan application, take the time to assess your repayment abilities. Find out if you can pay off your personal loan in a few months or if you have to stretch out your payments for several years. Keep in mind that the length you choose has a significant impact on your monthly payment and interest rate.
Time to Receive Funds
When it comes to fund disbursement, there is a difference between Upstart and American Express. Personal loans processed by Upstart are released the next day, while American Express deposits funds on the same day you sign the loan agreement. Both options are ideal for individuals who want a personal loan for financial emergencies.
It’s worth noting that applying online can speed up the time you receive your funds. Ensure that you have all the documents required by the lender before applying. Also, make sure that the loan application you submit is complete and free of errors. Otherwise, your loan approval may take longer.
The faster your funds are released, the sooner you can use them. This is crucial if you’re using your personal loan for an emergency. Both Upstart and American Express are fast-funding options, but the latter has the slight upper hand for releasing funds on the same day of loan approval.
As always, look into other factors when choosing the best lender for your situation. Fund disbursement times are only one criteria to consider when evaluating which lending company is best for you.
Final Thoughts
When comparing Upstart vs. American Express for personal loans, Upstart is more attractive because it caters to a wide range of borrowers. People with bad credit scores can apply, and those with good credit can secure low APRs from this lender.
Furthermore, Upstart has higher loan amount limits, ranging from $1,000 to $50,000. It also releases funds as early as the next day after signing the loan agreement.
Although American Express offers lower APRs and same-day funding, its personal loans are only available to pre-approved American Express cardholders, limiting those who can apply. In addition, only borrowers with a minimum credit score of 660 are eligible for its personal loans.
Regardless, the best personal option for you will depend on your particular needs and situation. As a result, you should evaluate your unique circumstances to weigh each factor necessary in choosing a personal loan lender.
Frequently Asked Questions About Personal Loan Lenders
Browse MoneyGeek’s answers to some frequently asked questions to learn more about personal loan lenders.
Usually, lenders will require you to submit various documents when you apply for a personal loan. These include proof of identity, address verification and income verification.
You can check your credit score by reaching out to TransUnion, Equifax or Experian.
After you submit your loan application, your lender may conduct a hard credit pull to review your credit history. That said, some lenders will do a soft inquiry first to help you understand whether or not you qualify.
No, interest rates differ from lender to lender. The best way to secure favorable rates is by shopping around and comparing rates.
It depends. Some lenders have origination fees, prepayment penalties and late fees. Check with your chosen lender to confirm whether or not it charges these fees.
Applying for a personal loan online is the best way to receive your funds as soon as possible.
Yes, you’re allowed to prepay your loan. However, some lenders may charge a prepayment penalty. Talk with your lender to learn about any prepayment fees you may incur.
sources
- American Express. "American Express Personal Loans." Accessed September 22, 2022.
- American Express. "Frequently Asked Questions." Accessed September 22, 2022.
- Upstart. "A Personal Loan for Your Personal Needs." Accessed September 22, 2022.
The content on this page is accurate as of the posting/last updated date; however, some of the rates mentioned may have changed. We recommend visiting the lender's website for the most up-to-date information available.
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