In this Review..
Discover is one of the leading U.S online banks. It offers customer service based 100% in the USA. Discover offers a variety of products including personal loans with competitive rates and no origination fees.
You can use a Discover personal loan for various reasons, from financing a large purpose, such as home repairs or a wedding to debt consolidation. You can also use your personal loan to cover unexpected expenses, remodeling your home or purchasing a new vehicle.
If you want to use a Discover loan for debt consolidation, Discover will send funds directly to your creditors. You will need to use at least 70% of your loan for your existing creditors, or your final APR may be impacted.
Discover personal loans are available for $2,500 to $35,000. However, the available loan amount will depend on factors such as your credit score. Loans are offered at a fixed rate ranging from 6.99% to 24.99%. But, Discover does not offer a rate discount for those who enroll in autopay. The repayment terms range from 36 to 84 months.
Discover may focus on debt consolidation but their personal loans have many different uses such as vacation and wedding expenses.
APR
6.99% – 24.99%
Loan Amount
$2,500 – $35,000
Term
36 to 84 months
Min score
660
Discover Personal Loans is a product offered by Discover Bank. The bank was started in 1985 by Sears as a credit card. The company was owned by a few large companies before spinning off as its own company in 2007.
Discover Personal Loans is a mass market provider of personal loans with a focus on debt consolidation and financial educational resources. Discover is a very large player in the personal loan space and is a large public bank with billions of dollars in assets and in revenue. Discover offers many different products that most large banks provide.
Discover Loan Pros & Cons
As we know, each lender has its own pros & cons – here are the relevant things we found for potential borrowers:
Pros
- Soft Pull Inquiry – Discover personal loans allow for an initial soft pull inquiry online so the borrower can get an idea of the options for which they may qualify
- No Origination Fee – Discover personal loans has no origination fee and no prepayment penalties. These fees should always be considered in the cost of your loan. Many personal loan providers have large origination fees.
- Direct Payment to Creditors – Discover offers to send payments directly to creditors as part of their service. This way you know your new loan will go to pay down your current debt and not add to your overall debt.
- Competitive Interest Rates – Interest rates are competitive and rates are not as high as those of many other lenders for personal loans.
- 30 Day Money Back – “Discover Personal Loans strives to offer the lowest rate possible for personal loans. As a result, our loans include a 30-day money-back guarantee. If you decide within 30 days that you do not want your Discover Personal Loan, simply return the funds via check (including any amounts paid directly to your creditors). You will be charged zero interest.”
- Available in All States – Many personal loan providers are not licensed or available in all states.
- Longer Terms – Discover personal loans offer longer terms, up to 84 months, which is much longer than many other providers
Cons
- Longer Application Process –Discover personal loans turnaround can be longer than many other personal loan providers. Most loans will require you to call in and talk to a Discover representative.
- Smaller Max Amount –Discover personal loans’ max amount is smaller than many other personal loan providers.
- No Joint Borrowers – Discover does not allow for joint borrowers.
- Large Late Payment Fee –Discover personal loans have a late fee of $39, which is higher than most other providers.
Loan Details
Loan Amount Range | $2,500 – $35,000 |
Interest Rate Range | 6.99% – 24.99% |
Term | 36 to 84 months |
Origination Fee | None |
Late payment Fee | $39 |
Returned payment Fee | $39 |
Prepayment Fee | None |
Minimum Income | $25,000 annually |
Minimum Credit Score | 660 |
Funding | 1 to 7 days |
What Can a Discover Personal Loan Be Used For?
Discover personal loans can be used to pay for debt consolidation, vacations, wedding expenses, or home improvements. They cannot be used for any post-secondary education expenses.
- Home Improvement
Discover personal loans can be used for home repairs or renovations. The advantage of using a Discover personal loan for home improvement is the promptness of receiving the funds.
Typically, it takes a month or more to get an equity line of credit on your home. Discover personal loans also offer loans for green improvements. Discover has information on how “green” upgrades can save you money and improve your home.
- Vacation
A Discover personal loan for vacations offers a way to get money for your vacation without having to deal with credit cards or worry about every dime during travel.
This includes everything from family vacations to international travel and cruise vacations.
- Debt Consolidation
Discover personal loans focus on helping borrowers pay down debts. Debt consolidation loans with Discover require 70% of the loan to be paid to the creditor directly. If you don’t, the rate may be higher. If 70% of the loan does not go to the creditor, it could even result in a decline.
Debt consolidation is seen as wiping out debt and if you have lots of credit card or other debt and do not pay it off, Discover could decline the loan outright. Discover’s website has a very useful tool, the debt consolidation calculator, which you can use to see if a Discover loan may be right for you.
- Wedding Expenses
Application Process
- 1.
The minimum application requirements are that the borrower must be a US citizen or a permanent resident who is at least 18 years of age and makes at least $25,000 a year. Discover aggressively markets their personal loans, mailing out millions of invitations to apply.
- 2.
They have a large customer base, marketing to those who use their credit cards or other banking products. You do not need an invitation to apply. You can apply online or by phone.
- 3.
Even if you apply online, you will have to speak to a Discover representative. You can do a soft pull online to see what kind of rate Discover will offer to you. You will need basic personal information such as income, employment and banking information.
- 4.
If you are planning to consolidate debt, Discover will require creditor information, including balances and account numbers.
- 5.
The application process for Discover personal loans usually takes 1 to 7 days. In some cases they will require additional information in order to verify identification and/or income.
Discover may focus on debt consolidation but their personal loans have many different uses such as vacation and wedding expenses.
APR
6.99% – 24.99%
Loan Amount
$2,500 – $35,000
Term
36 to 84 months
Min score
660
Alternatives Lenders For Consideration
Here are our 3 choices of lenders which can use as a great alternative to Discover personal loan:
- Earnest Personal Loan
Earnest is a subsidiary of Navient and has been around since 2013. This company offers loans to “financially responsible” applicants. The company offers competitive rates from 5.99% with no fees. You can use your Earnest personal loan for any purpose.
You can take out an Earnest personal loan for amounts between $5,000 and $75,000. However, if you’re a resident in California, the minimum loan amount is $10,000. Earnest offers fixed rates that ranges from 5.99% to 17.24% APR. However, Earnest offers no additional discounts.
Earnest offers loan terms of three, four and five years. There are some qualification requirements for an Earnest personal loan. This includes:
- A minimum credit score of 680
- Proof of consistent income
- History of payments made on time
- No open collections accounts
- No bankruptcy declarations in the last three years.
- Upgrade Personal Loan
Upgrade is an online direct lender established in 2017. The company offers both personal loans and lines of credit called “Upgrade Card”. To date, 8 million people have applied for an Upgrade personal loan or Upgrade Card.
According to representatives, Upgrade looks for a credit score of at least 620. However, the company may consider other factors to establish your creditworthiness.
One issue to be aware of is the Upgrade fees. While there is no prepayment fee, Upgrade charges an origination fee of 2.9 to 8% on personal loans. There is also a $10 late payment fee, which applies after a 15 day grace period.
- FreedomPlus Personal Loan
This company mostly caters to people with great credit. They offer fixed rate loans to consolidate debt with a two to five year repayment period. The lowest interest rates are typically reserved for borrowers with the best credit scores.
FreedomPlus is one of the few lenders willing to offer joint or co-signed loans to those with poor credit. Approximately 30% of FreedomPlus borrowers have taken advantage of this, as it helps borrowers to access lower interest rates.
For example, if you qualify for a loan at 15% interest, it may reduce to 10% if you use a co signer with good credit.
Discover Personal Loan is Best for..
Discover personal loans are backed by a large bank with billions of dollars in assets and is a major provider of credit products. They have competitive rates and terms with no origination fees.
Discover may focus on debt consolidation but their personal loans have many different uses. It a mass-market product that can be of use to almost anyone.