Upstart is an online lending platform that partners with banks to provide personal loans from $1,000-$50,000. Upstart goes beyond traditional lending metrics to help borrowers find financing that considers their education, work experience, and more.
On this video we're going to review upstart financial personal loans. How do they work? What are the pros and cons of Upstart financial as a lender? The different steps in the application process and the purposes the loans can be used for? Let's start.
Upstart is a new peer to peer marketplace with over $2.7 billion in loan origination since 2017. It is based out of San Carlos, California, and started by former Google employees. upstart is an online lending marketplace that provides personal loans using traditional variables, such as education and employment to predict credit worthiness.
Upstart identifies high quality borrowers based on signals of their potential, even if they have limited credit and or employment experience. We call these consumers future prime borrowers. Upstart claims their AI, Artificial intelligence, systems are constantly learning and have instantly approved a 58% of applications.
Advantages - Upstart Personal Loans
Here are the most important advantages we found in upstart personal loans.
Soft pull inquiry - Upstart allows for an initial soft pull inquiry online so the borrower can get an idea of the options for which they may qualify. A soft pull does not affect your credit.
Good for borrowers with limited credit histories - Upstart is good for borrowers who may not have long credit histories. Most lenders prefer to lend to borrowers with long credit histories because they are considered less risky.
Modest income - Many personal unsecured providers have higher average incomes than upstart borrowers. So borrowers that have lower or modest incomes have a good chance of getting approval through upstart
Quick turnaround times - Upstart has a quick process and an easy application. Many borrowers are approved with money in their account by the end of the next business day. Unlike other peer to peer lenders, upstart will approve the loan without waiting for investors to invest or fund the loan.
Flexible repayments - You can customize your repayments. You can choose a payment due date and schedule your payments every other week or monthly. Upstart will work with borrowers who fall behind on payments.
No prepayment penalty - Upstart does not have a prepayment penalty.
No processing fee - Many personal loan providers charge for processing a check. Upstart does not.
Disadvantages - Upstart Personal Loans
However, as with any other lender, not everything is perfect. Here are the disadvantages you have to know before appling.
Higher low end rates for those with excellent credit - Borrowers with excellent credit can often find lower rates in the marketplace.
Origination fee - Upstart deducts a one time origination fee of 0% to 8% of your loan amount directly from your loan funds. Upstart has one of the highest origination fees when compared with other lenders. This should be considered in the pricing of your loan when you apply.
No joint applicants - The application is based on the applicant alone. Upstart does not allow for joint applicants.
High interest rates - Upstart has higher interest rates for borrowers with good credit. There are many other personal loan providers that have lower rates for borrowers with excellent credit.
Not available in all states - Upstart is not available in West Virginia.
New Company - Upstart is a new company that does not have a long track record of success.
What can an Upstart Personal Loan be used for?
Upstart loans can be used for many different things. They do not provide upfront much information about what their loans can be used for, but they do provide a shortlist of items.
For example, Upstart can be used to refinance credit cards, other debts and even student loans. Many providers do not allow their personal loans to be used for refinancing student loans or for post secondary education, but Upstart allows for both.
Upstart loans can be used to pay for personal expenses. The items listed on upstart include paying bills, including rent and medical bills, home improvement costs, moving costs, taxes, vacations, or wedding expenses. They can also be used to buy a car or for other large purchases. Upstart loans can also be used to expand or start a business.
How the Upstart application process works
The upstart application process only takes a few minutes. You will fill out a short form with some basic questions about yourself including your full name, contact information, date of birth, employment status, education, how much you have in savings, income and preferred form of repayment.
This form is for soft pull, meaning the credit inquiry will not affect your credit. You will get to see what your rate would be if approved. You will review the Terms and Conditions. Then if you want to move forward, you may need to provide some verification of items stated on the application such as your picture ID, social security card, bank statements, pay stubs, a copy of college transcripts or diploma or tax returns.
The bottom line
Upstart has a unique process for assessing risk of their borrowers and approving loans. They use AI to assess their applications. Upstart is a newer company, but is growing fast. Upstart is best for borrowers who have just started their careers and do not have a long credit history or strong income.
On our website, you can find many more reviews as well as calculators and other financial tools. Do you have an experience with Upstart financial loans? We would love to know your thoughts, so feel free to share them with us in the comments below. I hope you enjoyed it. And don't forget to subscribe to our channel on YouTube.
Transcribed by https://otter.ai
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