There are a growing number of companies offering ways to get personal loans online, and with rates that may be lower than brick-and-mortar banks.
The lender offers terms of 36 or 60 months. They also provide free credit monitoring services and some credit education tools.
The San Francisco-based company allows you to apply for a loan entirely online and claims it can deposit loan proceeds into your bank in as little as four days after your application is processed.
The relative ease of the application process and the competitive rates and loan terms could make Upgrade a solid option for anyone who wants to pay off debt or is otherwise in need of cash relatively quickly.
But there are many competitors. Is Upgrade the right personal loan solution for you? Read on to get more details.
Summary
Upgrade offers personal loans and lines of credit at relatively low interest rates and no prepayment penalty. And it has a simple online platform and application process. However, the decision-making behind its loan decisions are not clear, and there are other companies that may offer better interest rates and more term options.
Pros
- Competitive rates
- No prepayment penalties
About Upgrade
Upgrade is based in San Francisco and operates engineering and operations centers in Montreal, Phoenix, and Chicago.
The company was founded in 2016 and is backed by major investors including SAB Capital and Ribbit Capital. Its CEO, Renaud LaPlanche, is the founder and former CEO of Lending Club.
WebBank provides loans from Upgrade.
Who is Upgrade for?
Upgrade is appropriate for people in need of a loan or credit line of less than $50,000, and who possess better-than-average credit. It also helps if you are comfortable applying for and managing your loan entirely online.
There are no restrictions on how you can spend your Upgrade loan proceeds. For example, the funds could assist you in paying off credit cards (as interest rates are likely lower) or to cover emergencies.
Upgrade loans are less appropriate for auto purchases, as typical auto financing rates are probably lower.
For those who are unable or choose not to get a home equity line of credit (HELOC), Upgrade’s line of credits could be appropriate.
Upgrade is available in every state except Colorado, Connecticut, Iowa, Maryland, Vermont and West Virginia.
To determine if you’re eligible for a loan, Upgrade uses several factors including your credit history, usage and score. At a minimum, you must be a U.S. citizen or permanent legal resident 18 years of age or older (19 in Alabama). Also, you must verify your bank account and provide a valid email address.
Getting Started
Applying for a loan on Upgrade is simple. I tested the process and began on the Upgrade homepage.
First, I entered the amount of the loan I was requesting and the loan purpose. (Options include pay off credit cards, debt consolidation, business, home improvement, large purchase or other.)
Next, I entered that I wanted a $25,000 loan for home improvements.
Upgrade asked for my name, address, annual income, email address and password. But Upgrade denied me right away since they do not offer loans in Maryland.
So to go through the process, I entered the information for a relative in another state. However, I got a note saying, “Sorry, we are unable to approve you.” And there was no explanation for the denial.
Upgrade offers very little information on who is most likely to qualify for one of its loans or lines of credit.
I was personally unable to go through the process of fully applying for a loan. However, if you get past the pre-approval process, Upgrade will provide you with a 15-digit code. Next, you’ll enter it, along with the size and purpose of the loan you are requesting. Then they will provide some options of loan size, interest rate and term.
Once you accept one of the offers provided, you will be evaluated further. If they approve you for the loan, you’ll get your money within four business days.
Loans and Credit Lines
With Upgrade personal loans, you can apply for a specific amount of money and receive that total sum at once. You will pay back the loan, plus interest, monthly for an agreed upon term until you pay it back in full.
Upgrade also offers a personal line of credit, in which you can draw upon a sum of money as needed, and pay interest only on what you use.
In both cases, you can borrow from $1,000 to $35,000. There is no origination fee for the credit line.
Interest Rates
The fine print on Upgrade’s website indicates that you can get personal loans with fixed rates ranging from 5.94%-35.97% APR. Interest rates on lines of credit, meanwhile, range from 6.99% to 29.99%.
Depending on your credit score and history, you may be able to obtain a loan with a better rate than credit cards, which typically have rates between 15% and 20%. Thus, Upgrade could be an option for many people to assist in paying off high-interest credit card debt.
However, you might be able to find lower interest rates from other lenders. Peer-to-peer lenders such as Lending Club and Prosper could connect you with rates starting at 7.95% if you have excellent credit.
Plus, other lenders including SoFi, Marcus by Goldman Sachs, and BestEgg advertise rates as low as 5.99%.
Of course, you’ll never know what kind of rate you can get if you don’t apply. Upgrade will allow you to check your rate before actually applying for a loan, and this does not count as a hard pull on your credit report.
Credit Health Services
If you apply for a loan with Upgrade, you can access a series of tools to help you manage your credit. You can see a summary of your TransUnion credit report and your credit score.
Besides, they provide articles and other educational materials about credit. You’ll also get email alerts for identity fraud attempts or other items that may be impacting your credit score.
Mobile App
Upgrade offers a mobile app for Apple and Android smartphones.
Using the app, you can make payments and check balances on your loan as well as check your credit score. Plus, you can set up alerts to let you know when there are changes on your credit report.
Upgrade says it will be rolling out new features. These include personalized credit health recommendations and providing more ways to manage your loan account.
Upgrade says the app works on iPhone 7 or newer running at least iOS 9. But I downloaded it to an iPhone 6 and experienced no problems. Also, it reportedly will work on Android 6 or newer.
Fees
One of Upgrade’s big selling points is a lack of a prepayment penalty. This means that you will not have to pay anything if you pay off your loan early. However, you will be charged a fee to originate the loan.
This loan origination fee will be rolled into the loan principal and will range from 1% to 6%, depending on the loan. (As we noted above, there is no origination fee for the line of credit.)
If you are late in making a monthly payment on your loan or line of credit, Upgrade charges you a $10 non-refundable late fee. This only happens if they do not receive your payment within 15 calendar days of the due date.
Service Features
Looking for the right loan service company involves understanding what service features they offer.
Customer Service
Upgrade offers customer service via phone at 855-997-3100 or by emailing support@upgrade.com.
Online reviews suggest that you’ll deal with customer service rarely, if at all. Of the more than 16,000 reviews on Trustpilot.com, 81% rate Upgrade as “Excellent” and just 3% rate the company as “Bad.” The most common complaints appear to be related to the process of verifying documentation.
“The application and approval process went faster than any other lender that I have come across,” wrote a customer identifying himself as R. Dominguez. “Upgrade’s representative was patient, informed, courteous and proficient in assisting me. I have two (2) accounts with Upgrade and recommend this financial institution to anyone.”
Security and Privacy
Indeed, if you are giving your personal financial information to Upgrade, you want to feel confident that your information is secure.
Upgrade uses advanced secure socket layer technology and encryption. The company states that it also utilizes “firewalls, intrusion detection system, malware detection system and data loss prevention systems” to protect your data. And it conducts regular vulnerability scans of its applications and systems.
As stated on their website, Upgrade uses an “industry-leading infrastructure service provider” for its data centers, and physical access to the data center is strictly controlled.
Both Upgrade and WebBank acknowledge sharing some personal information for everyday business purposes and marketing. But it does not share information with affiliates or third parties.
Pros
Why go with Upgrade? Here are some traits in its favor:
- Simple website and application process
- Loan proceeds in four days or less
- Competitive low rates
- No collateral required
Cons
- Online only; no bank to step into for assistance
- Origination fees as high as 6%
- Some competitors offer a wider selection of loan terms
Alternatives
If you aren’t entirely sold on using Upgrade, there many competitors with similar products and services, and other ways of obtaining cash quickly.
Main competitors in the online personal loan space include:
Prosper: A peer-to-peer lending platform offering loans between $2,000 and $40,000 with 3- or 5-year terms. Prosper processes its loans from the same provider, WebBank.Origination fees range 2.41% to 5.0%- Discover Personal Loans: From the same company as Discover credit cards, offering personal loans of up to $35,000 with minimal fees.
- Upstart: Offering three and five-year loans of between $1,000 and $50,000.
- SoFi: Online-only lender offering personal loans with terms as long as seven years and an APR of as low as 5.99%. SoFi personal loans have no fees.
- BestEgg: Another online lender offering an APR as low as 5.99%. It offers the ability to get loan money within as little as a day. To qualify for the lowest rate, you’ll need a very high income and a high credit score.
- Marcus By Goldman Sachs: Offers no-fee, fixed-rate loans of between $3,500 and $40,000. Loan terms of three to six years.
You may also be able to get the equivalent of a short-term, no interest loan by performing a balance transfer on your credit card. Many credit cards offer no interest for 12 months or longer if you move balances to them.
The big catch here is that if you don’t have the balance paid off before the promotional period ends, you could be on the hook for paying some very high interest charges.
Notably, for those interested in getting a line of credit with Upgrade, you may be able to get a better rate by borrowing from the equity of your home if you have one.
You can find home equity lines of credit (or HELOCs) with interest rates of 5% or lower, depending on the lender and your credit history. However, there are some fees associated with HELOCs, and you must use your home as collateral.
Summary
Upgrade fits right in among the many competing platforms offering personal loans with relatively low interest rates and minimal fees.
Many borrowers will find it easy to get a loan from Upgrade to pay off credit card debt, make home improvements, consolidate debt or make a big purchase.
You may enjoy Upgrade for its simplicity, but it’s possible the company went too far by offering very little information about its decision-making process. Other competing lenders provide more detail about the requirements that an applicant might need to be approved for a loan.
If you are in need of cash quickly and qualify for a loan, you may find Upgrade is a good fit for you. But it may be worth it for you to explore some competitors for better rates and a smoother overall experience.
Do you have a loan or line of credit from Upgrade? Or would you consider applying? Let us know in the comments.
Upgrade Personal Loan Upgrade Disclaimer:
*Personal loans made through Upgrade feature Annual Percentage Rates (APRs) of 5.94%-35.97%. All personal loans have a 2.9% to 8% origination fee, which is deducted from the loan proceeds. Lowest rates require Autopay and paying off a portion of existing debt directly. Loans feature repayment terms of 24 to 84 months. For example, if you receive a $10,000 loan with a 36-month term and a 17.98% APR (which includes a 14.32% yearly interest rate and a 5% one-time origination fee), you would receive $9,500 in your account and would have a required monthly payment of $343.33. Over the life of the loan, your payments would total $12,359.97. The APR on your loan may be higher or lower and your loan offers may not have multiple term lengths available. Actual rate depends on credit score, credit usage history, loan term, and other factors. Late payments or subsequent charges and fees may increase the cost of your fixed rate loan. There is no fee or penalty for repaying a loan early.
