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Personal Loans

Upgrade Personal Loan Review

Editorial Note: The editorial content on this page is not provided or commissioned by any financial institution. Any opinions, analyses, reviews, statements or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by any of these entities prior to publication.

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Upgrade
APR

7.99%
To
35.89%

Credit Req.

620

Minimum Credit Score

Terms

36 or 60

months

Origination Fee

1.50% - 6.00%

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Upgrade is an online lender that offers fairly priced personal loans for a term of either 36 or 60 months.... Read More.

Upgrade personal loan details
 

Fees and penalties

  • Terms: 36 or 60-month loan terms are available.
  • APR range: Upgrade offers interest rates from 7.99% to 35.89% APR.
  • Loan amounts: You can borrow from $1,000 to $50,000.
  • Time to funding: You can get funding within four business days after your loan is approved.
  • Hard pull/soft pull: The initial application to check rates only requires a Soft Pull which will not impact your credit. The full verification to approve you for the loan does require a hard pull.

Money from an Upgrade loan can be used to pay off credit card debt, consolidate debt and more.

Loans come with credit monitoring. However, the Upgrade Credit Health summary feature provides an overview of your TransUnion credit report but not a full report of all accounts. The VantageScore 3.0 offered with credit monitoring updates every seven days.

Accounts with Upgrade also have a credit score simulator tool along with weekly credit updates, trend charts and email alerts. Right now, credit monitoring is only open to borrowers. However, Upgrade does plan to eventually open up the credit monitoring product to everyone — borrower or not.

  • Origination fee: One drawback of the Upgrade loan is the origination fee — it can range from 1.50% - 6.00% of your loan amount. And because the fee is deducted from your loan before you receive the funds through a bank deposit, you’ll actually be getting less money than you ask for. Be sure to factor that in before you decide your loan amount.
  • Prepayment fee: Upgrade loans have no prepayment penalty. You can pay off your loan at any time without worrying about a fee.
  • Late payment fee: The late fee is up to $10 and charged if your payment isn’t received within 15 calendar days of your payment due date.
  • Other fees: Returned check payments or failed electronic deposits cost $10 on top of whatever your bank charges for the returned payment.

The big fee that you have to watch out for with Upgrade is the origination fee. The origination fee can take a sizeable chunk out of your loan before you even get any money. Take into consideration this fee when deciding how much money to borrow since it will decrease the amount of cash you’ll receive.

Eligibility requirements

  • Minimum credit score: 620
  • Minimum credit history: Not available
  • Maximum debt-to-income ratio: Not available

Upgrade doesn’t disclose all of the conditions used to qualify borrowers but they do list the minimum credit score accepted as 620. As far as residency and other requirements, you need to meet the following conditions:

  • Be a U.S. citizen or permanent resident (or a valid U.S. visa holder)
  • Be at least 18 years old or 19 in select states
  • Have a verifiable bank account and email address

Upgrade loans are exclusive to certain states. You can’t get an Upgrade loan if you live in Conn., Colo., Iowa, Mass., Md., Vt., or W.Va. Upgrade doesn’t specify that you work with a certain type of employer to qualify. You do need to input your salary during the application. Upgrade may request that you turn in supporting documents like your pay stubs to support the income you claim.

Self-employed workers can apply for Upgrade loans as well, but you may have to submit more paperwork to prove your income. You could be asked to provide two years of tax documents, bank statements and other tax-related forms.

Applying for a personal loan from Upgrade

To get started with Upgrade, you can check your rate online, which doesn’t require a hard pull on your credit. You enter in preliminary information about the loan you need.

The next part of the short initial application is you putting in your name, address and annual income. Upgrade will give you a few preapproved offers based on the information.

The loan offers you receive after giving this information will include a loan amount, interest rate and term. After choosing an offer, you’ll be asked for the bank account where you want to deposit the money if your application is approved. A hard credit pull will be performed to make a final decision.

You’ll get an email asking to upload supporting documents, such as your pay stubs or tax documents to be verified. You can get funding within four business days when all of your information clears. Sign up for autopay during the application process to get the very best rates available.

Pros and cons of an Upgrade personal loan

Pros:

Cons:

  • Soft Pull. You can check rates without a hard pull. The hard pull only comes into play if you decide to go through the final approval process.
  • Free credit monitoring. You get a VantageScore 3.0 with your loan account and a credit report summary from TransUnion. It’s not a full credit report, but still a free resource that you can use to improve your score.
  • Competitive interest rates. The interest rate range at Upgrade is competitive. You can qualify for a loan with just a 620 or above. The lowest rates available are usually reserved for people with the very best credit scores so keep that in mind.
  • Quick funding. If approved for a loan, you can get access to money within four business days.
  • Origination fee. Upgrade has an origination fee and it’s the biggest con. There are a few online lenders that don’t charge an origination fee which can offer you some savings. We’ll cover a few below and you can shop for no-fee personal loans in our “best of” personal loan roundup here.
  • Limited availability. You won’t be able to obtain an Upgrade loan if you live in the states that Upgrade currently does not serve.
  • Relatively short loan terms. You can borrow a decent amount from Upgrade, but the loan term maximum is five years. The Upgrade loan may not be the right one for you if you need more time to repay the debt.

Who’s the best fit for an Upgrade personal loan?

Upgrade loans can be worthwhile for someone who needs money quickly because you can get cash within four business days. You can also benefit from this loan if your credit score is less than perfect since the credit score minimum is 620.

With that said, you still may want to work on your credit before applying for an Upgrade loan or any other loan. A higher credit score is going to help you get approved for the better interest rates. Plus, Upgrade looks beyond your credit to review your credit usage and history before approving you.

An Upgrade loan may suit your needs if you’re looking for a sizeable loan for a major purchase because you can borrow up to $50,000. That’s a decent amount of money to pay off high interest credit card debt, consolidate other debt, or even fund a business.

The biggest problem area for this loan is the origination fee since there are options without one. You should shop around for loans first that don’t have an origination fee before considering this loan.

Alternative personal loan options

SoFi

SoFi is an example of one lender that has No origination fee. SoFi also has longer loan term options than Upgrade. You can borrow up to $50,000. The interest rate range for SoFi is more competitive. Lenders with low interest rates generally serve borrowers with good to excellent credit. Qualifying for SoFi may be more of a challenge. Fortunately, SoFi will let you pre-qualify without a hard inquiry so you can check rates.

SoFi
APR

5.99%
To
16.49%

Credit Req.

680

Minimum Credit Score

Terms

24 to 84

months

Origination Fee

No origination fee

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SoFi offers some of the best rates and terms on the market. ... Read More


Fixed rates from 5.990% APR to 16.490% APR (with AutoPay). Variable rates from 5.74% APR to 14.60% APR (with AutoPay). SoFi rate ranges are current as of February 15, 2019 and are subject to change without notice. Not all rates and amounts available in all states. See Personal Loan eligibility details. Not all applicants qualify for the lowest rate. If approved for a loan, to qualify for the lowest rate, you must have a responsible financial history and meet other conditions. Your actual rate will be within the range of rates listed above and will depend on a variety of factors, including evaluation of your credit worthiness, years of professional experience, income and other factors. See APR examples and terms. Interest rates on variable rate loans are capped at 14.95%. Lowest variable rate of 5.74% APR assumes current 1-month LIBOR rate of 2.51% plus 4.28% margin minus 0.25% AutoPay discount. For the SoFi variable rate loan, the 1-month LIBOR index will adjust monthly and the loan payment will be re-amortized and may change monthly. APRs for variable rate loans may increase after origination if the LIBOR index increases. The SoFi 0.25% AutoPay interest rate reduction requires you to agree to make monthly principal and interest payments by an automatic monthly deduction from a savings or checking account. The benefit will discontinue and be lost for periods in which you do not pay by automatic deduction from a savings or checking account.

To check the rates and terms you qualify for, SoFi conducts a soft credit pull that will not affect your credit score. However, if you choose a product and continue your application, we will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit pull.

See Consumer Licenses.

SoFi Personal Loans are not available to residents of MS. Maximum interest rate on loans for residents of AK and WY is 9.99% APR, for residents of IL with loans over $40,000 is 8.99% APR, for residents of TX is 9.99% APR on terms greater than 5 years, for residents of CO, CT, HI, VA, SC is 11.99% APR, and for residents of ME is 12.24% APR. Personal loans not available to residents of MI who already have a student loan with SoFi. Personal Loans minimum loan amount is $5,000. Residents of AZ, MA, and NH have a minimum loan amount of $10,001. Residents of KY have a minimum loan amount of $15,001. Residents of PA have a minimum loan amount of $25,001. Variable rates not available to residents of AK, TX, VA, WY, or for residents of IL for loans greater than $40,000.

Terms and Conditions Apply. SOFI RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE. To qualify, a borrower must be a U.S. citizen or permanent resident in an eligible state and meet SoFi's underwriting requirements. Not all borrowers receive the lowest rate. To qualify for the lowest rate, you must have a responsible financial history and meet other conditions. If approved, your actual rate will be within the range of rates listed above and will depend on a variety of factors, including term of loan, a responsible financial history, years of experience, income and other factors. Rates and Terms are subject to change at anytime without notice and are subject to state restrictions. SoFi refinance loans are private loans and do not have the same repayment options that the federal loan program offers such as Income Based Repayment or Income Contingent Repayment or PAYE. Licensed by the Department of Business Oversight under the California Financing Law License No. 6054612. SoFi loans are originated by SoFi Lending Corp., NMLS # 1121636. (www.nmlsconsumeraccess.org)

LendingClub

LendingClub has an APR range and loan terms that are pretty comparable to what Upgrade has to offer. The minimum credit score required and the origination fee are similar. You can borrow up to $40,000 on a fixed rate personal loan. Pre-qualifying for LendingClub won’t impact your credit. Consider shopping with this lender to see if you can get a better rate before settling with Upgrade.

APR

6.95%
To
35.89%

Credit Req.

600

Minimum Credit Score

Terms

36 or 60

months

Origination Fee

1.00% - 6.00%

SEE OFFERS Secured

on LendingTree’s secure website

LendingClub is a great tool for borrowers that can offer competitive interest rates and approvals for people with credit scores as low as 600.... Read More

Marcus by Goldman Sachs®

The Marcus personal loan by Goldman Sachs Bank USA is another no-fee personal loan. The available loan terms are slightly longer than Upgrade, which could help you stretch out the loan payment. The interest rates are also comparable to Upgrade, but the no-fee aspect gives it a leg up. Shopping for Marcus loan rates also won’t trigger a hard inquiry.

Marcus by Goldman Sachs®
APR

5.99%
To
28.99%

Credit Req.

Varies

Minimum Credit Score

Terms

36 to 72

months

Origination Fee

No origination fee

SEE OFFERS Secured

on LendingTree’s secure website

Marcus by Goldman Sachs® offers personal loans for up to $40,000 for debt consolidation and credit consolidation. ... Read More

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

Taylor Gordon
Taylor Gordon |

Taylor Gordon is a writer at MagnifyMoney. You can email Taylor here

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Personal Loans

Here’s Why You Should Avoid Cosigning a Loan for a Friend

Editorial Note: The editorial content on this page is not provided or commissioned by any financial institution. Any opinions, analyses, reviews, statements or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by any of these entities prior to publication.

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You’re in a tricky situation: your friend, who you love and care about deeply, has come to you asking for your help getting a loan that they desperately need. You know the loan could benefit your friend, but you’re also unsure of the risks behind cosigning a loan.

The most important step you can take is to learn why cosigning a loan for a friend is rarely a good idea. That way, you can understand why you probably should avoid it.

Should you cosign a loan for a friend?

In general, you may want to avoid cosign a loan for a friend. Here’s why:

  • You become legally responsible for the loan. In the eyes of the lender, the full loan amount is 100% yours. That means if your friend doesn’t make payments, the two of you will be held responsible.
  • Your credit score could be affected. Should your friend miss even one payment, your credit score could be negatively impacted since the loan is considered to be in your name too. And if the borrower defaults on the loan completely, it could impact your credit score even more.
  • You could damage your friendship. Consider the risks to the relationship with the person you are cosigning a loan for if they are unable to pay back the loan. Is the risk of ruining your friendship worth it?
  • You could lose personal property. If a loan — such as a personal loan — requires any collateral, such as your car, house or other personal asset, you are at risk of losing your property should your friend default on the loan.

Reasons why you may or may not choose to cosign a loan

Here’s a more comprehensive look at reasons why you might choose not to cosign a loan:

  • You can’t afford the loan. You should not take the risk on of cosigning a loan unless you can afford to pay the loan in its entirety. Otherwise, you could liable in court or even have your assets seized as part of your state’s collection practices.
  • You need a loan for yourself. If you know you will need your own loan soon, cosigning a friend’s loan could prevent you from being eligible for a loan for yourself.
  • You’re concerned about your credit score. If you’ve had a history of bad credit, are trying to build up your own credit or just don’t want to see your credit score negatively affected, you need to be aware that cosigning a loan could hurt your own credit score if your friend misses payments or defaults on the loan all together.
  • Your friend has a history of bad financial decisions. You should know why your friend needs a loan. It’s within your right to decide that you won’t cosign a loan if you don’t agree with how they’ll use loan funds. If your friend tends to rack up debt, you’re also free to explain to your friend that you don’t feel confident they need the added debt.

That being said, there may be a few circumstances where it is acceptable to cosign a loan for a friend. For example:

  • You can afford to pay the loan completely. If you cosign a loan, you are agreeing to be responsible for the loan amount in the event that your friend is unable to pay it. So, if you can afford to pay off the entire loan amount and are willing to do so, you could cosign a loan with less risk of hurting your own finances. Aside from the money you’d be out for the loan amount, of course.
  • The loan is for both of you. If you are purchasing something together, cosigning a loan might be a logical move, as you will both be utilizing the item or asset. For family members, a parent might choose to cosign a loan so their child could potentially consolidate student loan debt at a lower interest rate.
  • You’re willing to take on the risk. Maybe you feel like your friend has no other options, this is a necessary step and you are fully aware of the risks involved. In that case, cosigning a loan is a personal decision that only you can make.

How to protect yourself when cosigning a loan

If you do decide to cosign a loan with a friend or someone else, you should also take steps to protect yourself as much as possible before the loan is enacted. You can minimize your risk by taking actions such as:

  • Don’t put down personal assets as collateral. If you’re willing to cosign on a loan, you shouldn’t wager more than that. Using your home, car or other personal asset as collateral only increases your risk.
  • Establish expectations in advance. You should sit down with your friend to establish expectations for the loan and repayment. It’s helpful if you can set out a plan in writing about the consequences if your friend misses payments or is unable to fully repay the loan.
  • Stay on top of the loan. Although it is recommended that you keep close tabs on the borrower to ensure that they are repaying the loan on time each month, you could also ask the creditor to inform you of any missed or late payments automatically. If the lender has an online system, you and your friend could also share the account information. That way, you could easily log into your account to review payment information.
  • Try negotiating loan terms. Rules will vary by lender and state, but you may be able to negotiate what you’re responsible for as a cosigner, such as limiting your liability to the loan principal balance instead of the full principal and interest amount. You can also try to negotiate responsibility for late fees, attorney fees or accrued court costs.

Other ways of helping your friend

Outside of cosigning a loan for your friend, there may be other ways that you can help, such as:

  • Assisting with a down payment. Perhaps you can’t afford to take on the risk of cosigning an entire loan for your friend, but you may be able to help them put together a down payment so that they may qualify for a conventional loan.
  • Lend them the money directly. To ensure that you would not be legally responsible for your friend’s debt and to avoid possible damage to your own credit score, you could consider lending your friend the money they need directly, either as a lump sum or in installments. It is advisable to get all loan terms in writing and to have the loan contract notarized if you do choose to DIY a loan.

The bottom line

Although you may want to cosign a loan with a friend to help them, taking on the legal responsibility of someone else’s debt is usually not a good idea for most people. Agreeing to become a cosigner means you run the risk of being liable for the loan amount and the possibility of your own credit score taking a negative impact.

You should carefully consider the risks you are willing to take and take steps to minimize them before agreeing to cosign a loan for a friend. In most cases, unless you can fully afford and are willing to pay off the entire loan amount, the cons do outweigh the risk of cosigning on a loan for a friend.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

Chaunie Brusie
Chaunie Brusie |

Chaunie Brusie is a writer at MagnifyMoney. You can email Chaunie here

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Should You Use a Personal Loan to Build Credit? What to Consider

Editorial Note: The editorial content on this page is not provided or commissioned by any financial institution. Any opinions, analyses, reviews, statements or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by any of these entities prior to publication.

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If you’ve been trying to build up your personal credit, you may have considered using a personal loan. Taking out a personal loan could show creditors that you can responsibly handle different kinds of debt and follow the terms to which you and your lender have agreed.

But how successful you are depends on your ability to pay the loan back within the given term limits. Here’s what you should consider before taking out a personal loan to build credit.

Pros vs. cons: Using a personal loan to build credit

There are both pros and cons to taking out a personal loan in an attempt to increase your credit score:

Pros

  • Add to your credit mix: A personal loan could help you diversify your credit mix, which accounts for 10% of your FICO score.
  • Stay current on payments: You could use a personal loan to refinance a debt or consolidate debts to a lower interest rate. Doing so could help ensure you stay current on payments, which positively impacts your credit.
  • May not have to put down collateral: An unsecured personal loan doesn’t require you to put up collateral to secure the loan. That means your house or other assets can’t be taken away if you default.
  • Lower your credit utilization ratio: A personal loan can also lower your credit utilization ratio if you pay off your credit card balance with your loan and keep the card open. Credit utilization is important factor in your FICO score, and it is basically the amount you owe divided by the total amount you have available to you. Personal loans don’t count toward it.

Cons

  • Fees, fees, fees: Depending on your credit score, you could be paying hefty interest fees over the length of the loan, in addition to any other fees your lender charges, such as prepayment penalties, late fees and origination fees.
  • Could increase your debt-to-income ratio: Taking out a personal loan could change your debt-to-income ratio. This could make future lenders less likely to let you borrow funds until some, or even most, of your personal loan is paid off.
  • Strict payment schedule: Personal loans are often issued for a period of between 24 to 60 months and offer little flexibility when it comes to adjusting payments. So if you lose your job or face other financial struggles, your lender may be unwilling to work with you to reduce or delay payments.

Is using a personal loan to build credit right for you?

A personal loan might make sense for you if your goal is to diversify your credit mix or lower your credit utilization ratio by paying off a credit card. It’s also a good option if you plan to use the funds at a lower interest rate to pay off other debt that’s charging you a higher interest rate.

A personal loan to build credit might not be a good option if you’re already struggling with paying off debt, if you have no prior credit history or if you could get a credit card with a lower rate of interest instead. If you can’t get a reasonable interest rate, a personal loan might not be a good choice, said David Gokhshtein, a New York-based member of the Forbes Finance Council.

“In most cases, people in this scenario already have lower credit scores, leading to very high interest rates they could be paying off indefinitely,” he said. “If the debt gets sent to a collection agency, it will further damage the person’s credit score.”

That said, it’s important you have a clear picture of your financial situation. Consider the following questions:

  • Is your credit score good enough to qualify for competitive interest rates?
  • Can you afford the cost of a personal loan?
  • Is taking out debt and repaying it with interest worth it to build your credit?
  • Do you have a good use for the funds?

Answering these questions could help you decide whether or not to move forward with this option.

How to take out a personal loan

The first thing you should do if you decide to get a personal loan is to check your credit score. A FICO score of 700, on a range that spans 300 to 850, indicates you have good credit and would be likely eligible for a variety of loan offers, including a personal loan at a reasonable rate of interest. Because FICO scores are seen as an accurate reflection of your creditworthiness, lenders rely on them in 90% of all decisions.

You’ll want to research your options for lenders before committing to a loan, as well. You can use MagnifyMoney’s personal loan marketplace to compare lenders. You may also look to local banks or credit unions.

If possible, apply for preapproval from your top lenders of choice. Preapproval will allow you to see rates and terms you might qualify for with a soft credit check, which won’t affect your credit score.

Consider the following when weighing your loan options:

  • Rates
  • Fees
  • Conditions
  • Lender perks, such as support in case of job loss

Once you decide on a lender, you can submit to a hard credit check to see your final rates and terms. Depending on the lender, you could get loan funds within a few business days.

Others strategies to improving your credit

Consider the following ways to build credit without accumulating any additional debt:

Get a credit builder loan. With this type of loan, the money you borrow is deposited into an interest-bearing account. As you make payments on the debt, your payments are reported to the credit bureaus. Once you pay off your debt, the loan funds and the interest they earned are released to you.

Charge only what you can pay in full each month. If you have a credit card, you could use to work on your credit. Just make sure you pay off the card in full each month. “It is imperative to create and use a simple budget to make sure you follow this rule,” said Freddie Huynh, the San Francisco-based vice president of credit risk analytics at Freedom Financial Network. “Being able to pay your bills on time is the most important factor in the calculation of your credit score, accounting for 35 percent.”

Review your credit reports regularly for accuracy and correct any errors you find. You can access credit reports from each of the three main credit reporting agencies once a year for free at www.annualcreditreport.com. “If any report shows any inaccuracy, follow the directions on each agency’s website to correct it,” Huynh said.

The bottom line

Carefully consider your options before taking out a personal loan. You should have a clear idea of how you’ll use the loan funds and what the total cost of the loan will be. Most importantly, if your credit has been damaged by poor financial habits in the past, you need to consider whether or not a personal loan is only a temporary solution to a larger problem.

“My biggest concern with anyone considering a personal loan to pay off high interest credit cards is that they are focusing on the symptom, not the cause,” said Todd Christensen, the Boise, Idaho-based education manager at Money Fit by DRS. “If the borrower is disciplined, it might make sense; otherwise, debt management through a nonprofit credit counseling agency could make more sense.”

While a personal loan can be one part of the credit building or repairing process, it’s not your only possible solution. In fact, Christensen said taking out a personal loan could be part of a multi-pronged strategy to boosting your credit. Still, a personal loan on its own could help depending on your finances — given that you properly research lenders, stay disciplined during repayment and take extra care of your money throughout the process.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

Barbara Balfour
Barbara Balfour |

Barbara Balfour is a writer at MagnifyMoney. You can email Barbara here

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