Upstart personal loan review

Upstart overview

Upstart is a solid choice for a personal loan. It partners with state and federally-regulated banks and provides them with loan origination and underwriting services. This means that Upstart does not lend its own money and your loan will actually be from a partner bank. In other words, once you go through the Upstart application and underwriting process, if you are approved, you will get an offer from one of Upstart’s partner banks. Nonetheless, Upstart’s platform offers competitive rates and offerings, and we think Upstart is worth considering when thinking about a personal loan.

Upstart uses a non-traditional, artificial-intelligence-based underwriting approach that considers both traditional factors (e.g. credit, income, and debt) and non-traditional factors (e.g. education and employment history) when making loan decisions. This means that Upstart may arrive at loan qualification, interest rate, and loan fee decisions differently than traditional lenders.

We believe the real value that Upstart offers to its bank partners is an automated online application and origination process. This alone has value to a consumer as it may simplify the borrowing process. We also, in general, like different approaches in a market, as they bring innovation and new options. We look forward to seeing how Upstart evolves over time.

Product overview

Upstart offers personal loans from $1,000 to $50,000¹ with a typical effective APR between 6.46% and 35.99%³. The term for these loans ranges from 3 to 5 years.

Upstart fees

Upstart has origination, late, return check, and paper statement fees.

Origination fees

The origination fee ranges from 0% to 8% and is a one-time, non-refundable fee that is deducted from loan proceeds once approved for a loan.

Late payment fees

Late fees are the greater of $15 or 5% of the unpaid loan amount and are charged per occurrence for payments made more than 15 days from your due date.

Check & ACH return fees

The return check or ACH return fee is $15.

Note: Individual rates, fees, loan amounts, and loan terms are subject to change and will depend on various individual factors including an applicant’s education history, work experience, credit history, and state residence. The numbers provided here are general estimates. Always check Upstart's website for the latest rates, terms, and eligibility.

Personal loan eligibility & requirements

Checking eligibility

To check eligibility, you will be asked to provide information about your academic history, work experience, and what you plan to do with the loan proceeds. Any offers you receive will be contingent on the verification of what you provided plus an additional hard credit report pull. Checking to see your rates and eligibility will not impact your credit score, but once you do apply, your credit profile may be impacted as Upstart will do a hard pull then.

Requirements to qualify for a loan

To qualify for a loan, you must meet all of the following:

1. Be residing in the 50 U.S. states (you do not have to be a citizen or permanent resident) with exceptions for military personnel
2. Be at least 18 years old (applicants from Alabama and Nebraska must be at least 19 years old)
3. Have a valid email account
4. Have a verifiable name, date of birth and Social Security number
5. Have regular, verifiable source of income of $12,000 or more annually—such as full-time job, a full-time job offer starting in 6 months (except if accepted to a Upstart partner bootcamp and seeking employment after graduation), a regular part-time job, or another source of regular income
6. Have a personal banking account at a U.S. financial institution with a routing number
7. If the consumer has one, have a credit score that is at least 580 in most states
8. Not have any bankruptcies or public records on your report
9. Not be currently delinquent on any accounts

Upstart also checks how much debt you have in comparison to your income.

Existing Upstart borrower requirements

If you’re currently already borrowing a loan from Upstart, you must meet all of the following:

1. Have made on-time payments for your 6 previous consecutive payments, with no failed payments
2. Have no more than one outstanding loan in the Upstart Loan Program at the time of application
3. Have no more than $50,000 of total principal outstanding at the time the loan originates.

If you have finished paying off an existing loan and made on-time monthly payments for the 6 previous consecutive months, you are able to apply for a second loan after your most recent payment is cleared (14 days from the payment date). If you have finished paying off an existing loan and any of the 6 most recent monthly payments were not on time or you paid off the loan before reaching 6 monthly payments, there is a 60-day, cooling-off period before you can reapply.

When you’ll get your loan

If you accept your loan and complete all steps before 5 pm ET on a business day, you should receive your loan proceeds approximately the next business day. If accepted after 5 pm ET on a business day, you should receive your loan proceeds approximately 2 business days later. For loans that are being used for education-related purposes, there is an additional 3 business day period between when you accept your loan and when you will receive the funds. To receive the loan proceeds you must add and verify a personal bank account in your name.

Loan payments

Once you receive your loan, payments can be made through either recurring ACH, manual ACH, or by writing a check. Upstart does not lend its own money. Instead, it is the origination engine for banks. This means that once you go through the Upstart application and underwriting process, if you are approved, you will get an offer from one of their partner banks. Because your loan will actually be through a partner bank, we assume all servicing (i.e. statements, collections, customer services, etc.) will be provided by the underlying bank. We think in the long run more clarity on this would be helpful as your Upstart experience can vary greatly depending on their partner banks.

Some more about Upstart

The main differentiating feature for Upstart is their underwriting approach. It uses an artificial-intelligence-based lending approach. It partners with banks and credit unions to generate loans using this approach. Traditional lenders such as banks have used statistical models for decades to predict risk. Everyone generally uses the same approach. This means that everyone generally arrives at the same conclusion.

An Upstart study completed in partnership with TransUnion found that 83% of borrowers have never defaulted on a loan, YET only 45% have access to prime credit. Upstart is trying to incorporate other information such as education and employment along with new types of modeling to be able to better predict the likelihood of paying your loan back, as current models could do a better job at predicting reality. Again, we think this type of approach will take time to develop and today the real value Upstart brings to its partners is an online origination process.

Upstart has originated over $5.2B in loans for over 300,000 borrowers. It is backed by Google Ventures, Khosla Ventures, and other leading investors. It is based in the San Francisco area and has over 200 employees. It originates loans for bank and credit union partners. These loans are regulated and appear to be serviced by banks.