Upstart vs. Discover: Which Personal Loan Is Right for You?

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Edited byAshley Jacobs
Edited byAshley Jacobs

Updated: July 25, 2023

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Taking a modern approach to personal loans, Upstart uses artificial intelligence (AI) to help different borrower profiles, including those with bad credit, fund their personal needs. Similarly, Discover is a digital bank that makes borrowing fast, easy and convenient, releasing nearly a billion dollars in banking loans as of 2019.

MoneyGeek’s in-depth comparison of Upstart and Discover personal loans gives the average borrower a chance to explore the similarities and differences between these two lenders. You can learn all the essential information to make an informed decision, including interest rates and credit requirements.

Key Takeaways

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Upstart is the top lender for those with low credit scores or who are new to financial responsibility, while Discover could suit borrowers with excellent credit who are looking to have some leeway in repaying their debts.

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Choosing the right personal loan lender involves more than just researching interest rates and credit requirements. It’s about choosing a lender that fits your financial needs and offers terms that are flexible.

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A lender’s decision to charge you a higher or lower APR can be based on your credit score, but lenders will also take your credit history and income into account. Knowing how a lender calculates your APR can help you determine whether to choose them or another lender who may offer a better rate.

Upstart or Discover: Overview

Getting approved for a personal loan can be time-consuming, requiring you to compare factors such as APRs, repayment terms, loan amounts and more. MoneyGeek evaluated two personal loan lenders, Upstart and Discover, to see how they stack up against one another with regard to what makes them stand out.

Upstart is known for providing personal loans for borrowers with low credit scores. On the flip side, Discover requires borrowers to have an excellent credit history. Upstart also has more comprehensive APR ranges and loan amounts, while Discover can provide borrowers with longer repayment periods.

Upstart


  • Upstart

    Upstart is a good option for those with limited credit histories or low credit scores.


    • 3.22% to 35.99%APR Range
    • 300Minimum Credit Score
    • $1,000 to $50,000Loan Amount Range
    • 36 to 60 monthsRepayment Terms
    • Next DayTime to Receive Funds

    Upstart is an online lending platform that helps people with poor credit get a first-time or personal loan. It offers loans from $1,000 up to $50,000. Whether you need help paying off a bill or funding a home project, this lender has something that will fit your needs. It can also give you an APR starting from 3.22%, but your credit score can cause this to go up to as much as 35.99%. Those with a poor credit history may want to consider a different lender.

    Upstart's application process is simple and straightforward. The majority of applicants do not need to submit additional documents and are able to complete the application process automatically by submitting their information and waiting for approval.

    Pros

    • Offers a low loan amount of $1,000
    • Low minimum credit score
    • No prepayment fees
    • Soft credit pull

    Cons

    • Has origination fee
    • Hard credit inquiry during application
    • No autopay discount
    • Low maximum loan amount of $50,000
    • Won’t accept co-signers
    • Loan amount: $1,000 to $50,000
    • Repayment terms: 36 to 60 months
    • Minimum credit score: 300
    • Time to receive funds: Next day
    Upstart

Discover


  • Discover

    Discover is a good choice for people who have been able to establish their credit successfully.


    • 5.99% to 24.99%APR Range
    • 720Minimum Credit Score
    • $2,500 to $35,000Loan Amount Range
    • 36 to 84 monthsRepayment Terms
    • Next DayTime to Receive Funds

    Personal loans from Discover have low interest rates with flexible repayment options, and you can take advantage of these if you maintain a good credit score. Discover can help you achieve your financial goals quickly, like making home renovations, paying for emergency expenses and more. However, if creditworthiness is not your strength, Discover may not be for you.

    One caveat to note about Discover is its low loan amounts, offering a maximum of up to $35,000. That said, its limitations in loan size make it the right lender for borrowers interested in a small loan without many frills.

    Pros

    • No prepayment fees
    • No origination fees
    • Flexible repayment periods
    • Low APR range

    Cons

    • Potential late payment fee
    • High credit score requirement
    • Loan amounts of up $35,000 only
    • Minimum household income requirement
    • Must meet certain debt-to-income requirements
    • Loan amount: $2,500 to $35,000
    • Repayment terms: 36 to 84 months
    • Minimum credit score: 720
    • Time to receive funds: Next day
    Discover

APR Range

Lender
APR Range

Upstart

3.22% to 35.99%

Discover

5.99% to 24.99%

The APR, also known as the annual percentage rate, is the annual cost of borrowing money. It is expressed as a percentage.

You can find APRs on credit cards and personal loans from banks, credit unions and online lenders. The higher the APR, the more expensive your loan will be over time. However, there are ways to make sure you don't pay too much for your loan, such as having an excellent credit score. Some factors that may further affect your APR include your loan term, size and type.

Upstart offers personal loans at APRs ranging from 3.22% to 35.99%. Conversely, Discover has APRs ranging from 5.99% to 24.99%. This gives Upstart personal loan borrowers a wider range of APRs, but Discover offers a lower maximum APR to those whose credit scores are less-than-ideal.

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MONEYGEEK’S VERDICT

Upstart's low starting APR may be a good thing, but Discover’s lower maximum APR gives it the edge in this comparison. Discover offers borrowers with good credit a rate as low as 5.99%, depending on their credit profile and other variables.

The APR is a measure of the total cost of a loan over its duration, so lower APR loans will save you money in interest and fees. Nonetheless, it is advisable to shop around and compare the APR of different providers.

Having said that, APRs are not the only factor to consider when taking out a personal loan. Take an in-depth look at other variables in your life.

Minimum Credit Score

Lender
Credit Score

Upstart

300

Discover

720

Upstart accepts applicants with a low credit score of 300 (subject to unique terms), making it less stringent than most lenders. Discover, on the other hand, requires its applicant to have a credit score of 720, which is higher than other lenders’ requirements. This 420-point difference is something that cannot be ignored if you have not built a good credit history.

Your credit score is a three-digit number that represents your creditworthiness. It is determined by the major credit bureaus and is based on information found in your credit report. Lending institutions use it to set your APR, loan terms and ultimately decide whether to give you a loan.

Your credit score can be impacted by a number of factors, including your credit history, current and outstanding balances, types of credit accounts (credit cards, mortgages, loans) and recent applications for credit.

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MONEYGEEK’S VERDICT

The significant difference between the credit score requirements of the two lenders makes it clear that Upstart is the winner in this comparison. The lending platform accepts people with credit scores as low as 300 and borrowers that do not have a sufficient credit history.

Discover’s 720 credit score, on the other hand, could be difficult to attain for first-time borrowers. However, keep in mind that low credit scores can also mean high interest rates, which may catch you off guard down the road. That’s why MoneyGeek recommends building your credit score through good financial practices.

That said, credit scores are not the only factor to consider when taking out a loan. We suggest you look at other aspects of your finances to see which lender best suits your needs.

Loan Amount Range

Lender
Loan Amount Range

Upstart

$1,000 to $50,000

Discover

$2,500 to $35,000

A lender's loan amount range is the minimum and maximum amount the lender will make available to a borrower. Lenders determine their loan amount range based on factors like the purpose of the loan and the lender's capacity to lend that much money.

Upstart offers personal loan amounts starting from $1,000 and going up to $50,000. Meanwhile, Discover personal loans have a higher minimum but lower maximum limits, ranging from $2,500 to $35,000. Both lenders can be used for minor expenses, but Upstart can lend $15,000 more than Discover. This is something to consider if you're funding or purchasing something that costs more than $35,000.

You can apply for any loan amount from either lender, but it’s best to assess your financial situation first so that you don’t end up with a loan amount that is too large or too small.

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MONEYGEEK’S VERDICT

In this comparison, Upstart has the edge over Discover for its wider range of loan amounts that borrowers can apply for. This means that Upstart is a more suitable option for those who need to finance a variety of purchases.

Personal loan amounts are one consideration in choosing a lender. Review other aspects of personal loans, such as interest rates and repayment plans, to make an informed decision about which lender is ideal for your needs.

Repayment Terms

Lender
Repayment Terms

Upstart

36 to 60 months

Discover

36 to 84 months

A loan's repayment term is the length of time it takes to pay off your debt. Most loans have terms ranging from two to four years based on your needs and financial situation. The longer you have before you need to pay back the loan, the higher your interest rate will be. Variables such as your credit score, debt-to-income ratio and what you are planning to use the money for also affect the repayment term you can get.

Upstart and Discover have similar minimum repayment terms of 36 months, but the latter has a longer maximum period of up to 84 months. Compared to Upstart’s maximum period of 60 months, that’s 24 months longer.

There are many factors to consider when choosing the length of your loan, such as your personal needs. However, if you'd like to save on interest rates, securing a short-term loan may be best for you.

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MONEYGEEK’S VERDICT

Discover offers borrowers more flexibility in repayment terms than Upstart, meaning borrowers have more options to choose from based on their needs. Keep in mind that short repayment terms typically mean low interest rates and higher monthly payments, while long repayment terms mean the opposite. Consider this before deciding how long you have to pay your loan.

Additionally, there are other factors to consider when taking out a loan. Giving them some serious consideration may help you choose the best lender for your needs.

Time to Receive Funds

Lender
Time to Receive Funds

Upstart

Next day

Discover

Next day

Upstart and Discover provide funding much more quickly than most lenders. Both have a turnaround time of 24 hours, meaning you can receive your funds as soon as the next day after signing an agreement. However, this depends on factors such as the amount you intend to borrow, your repayment period and your credit score.

Applying for a personal online is usually the quickest way to secure your funds since most companies allow you to prequalify via their websites or mobile apps. This can be faster than applying in person or over the phone.

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MONEYGEEK’S VERDICT

Quick disbursement of funds can help you deal with an unexpected financial emergency. For this category, Upstart and Discover are tied. Both lenders can provide funding within the next day after approving a loan. Some lenders may take up to three days, which makes Upstart and Discover’s turnaround time ideal for many people.

Remember, though, that while it's important to consider the speed with which you receive a loan, you should also look at other factors before choosing a lender.

Final Thoughts

Upstart and Discover both offer quick disbursement of funds, but Upstart still comes out on top as the better personal loan lender of the two. The lending platform offers a lower starting APR, accepts borrowers with less-than-ideal credit histories and has a wider range of loan amounts. Upstart is a good fit for people who are just starting out a credit line for the first time.

Discover redeems itself through a longer repayment period of up to 84 months and next-day funding (similar to Upstart). This can be ideal for people who need some leeway in terms of paying their loans back.

Overall, your decision comes down to your individual circumstances, as they determine what aspect of taking out a loan matters to you the most. This includes how much you need, when you need it and how you plan on paying it back.

Frequently Asked Questions About Personal Loan Lenders

MoneyGeek answered some of the most common questions that a borrower might find themselves asking, including required documents and personal loan fees.

What documents do I need to provide to personal loan lenders?
How do I know what my credit score is?
Do lenders conduct a hard inquiry?
Are interest rates on personal loans the same for all lenders?
Do lenders charge fees for personal loans?
What are the advantages of applying for a personal loan online?
Is prepayment allowed on personal loans?
sources
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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.

Editorial Disclosure: Opinions, reviews, analyses and recommendations are the author’s alone and have not been reviewed, endorsed or approved by any bank, lender or other entity. Learn more about our editorial policies and expert editorial team.