How do you know which lender to use for a bad credit loan? It’s a given that any loan you accept should help you financially and have terms you can fulfill. There are many options available in the online lending space. This review will compare the offerings of two leaders in the lending arena, Upstart and Avant.

What is Avant?

Founded in 2012, Chicago-based Avant Loans caters to people with bad credit. It provides a simple mobile app for borrowers to manage their loans. Avant is a secure alternative to payday loans and high-interest credit cards. It specializes in debt consolidation loans for people in financial hardship who require a safety net.

What is Upstart?

Upstart is a different lender because it uses artificial intelligence to determine whether a loan application should be approved or not. As such, it’s usually more flexible on credit scores than many competitors. It also helps those who do not have a FICO score or those who have a low score. Upstart also offers quick funding and has a minimum loan size.

What do Upstart and Avant Loans offer?

Like Upstart, Avant Loans is not a direct lender. Hence, Avant does not handle the entire loan process. Instead, Avant will review your loan application and determine if you are approved, after which their partner WebBank will fund the loan.

Avant and Upstart focus on giving “low- and middle-income borrowers” access to funding, including bad credit loans. 

Personal loans are available with terms ranging from two to five years. Both companies provide financial services such as debt consolidation, personal loans, emergency loans, and more. 

Avant and Upstart provide flexible services. Avant qualifies people with low credit scores, accepting applications with credit scores as low as 580. Similarly, for Upstart, FICO scores are not the only factor. Upstart expects the metric to be 600 or higher for people with a credit history.

Those who do not have a credit score or a credit history can still have their application reviewed. Avant and Upstart are appropriate for people unable to obtain personal loans due to poor credit or a lack of credit history.

What is Avant’s unique offering?

Quick funding

Funds can be deposited as soon as the following business day once your application is approved.

Accessible options 

Log in to your online dashboard to operate your Avant loan account; an app is also available for iOS and Android devices. You will have access to manage your account, send payments, and receive updates. Personal loan companies do not typically provide mobile apps.

Flexibility

Although not all lenders accept borrowers with credit scores below 600, Avant will consider such applicants. Even people with bad credit may be eligible for an Avant personal loan.

Transparency

Avant is upfront about its rates and fees and provides customers with all loan terms in writing before they sign.

What is Upstart’s unique offering?

AI system

Their AI system looks at other factors that might make you eligible, so approval is not based only on credit score. Upstart automates the process of obtaining personal loans.

Flexible repayments

You can change the due date of your repayments whenever you want, giving you a lot of flexibility.

Low minimum loan  

Upstart provides a minimum loan starting at $1,000, which is lower than many other lenders in the industry today.

Credit score

Upstart works with people having credit scores as low as 600 and accepts applications from people who do not yet have a FICO score.

Works fast

Personal loans can be approved in as little as 1-3 days.

How do the fees compare?

Avant Fees 

  •  Avant charges an origination fee ranging from 0.95 % to 4.75%.
  • If you miss your payment, you have a 10-day grace period and are charged a $25 late fee.
  • A $15 fee for NSF/returned payments
  • There is no check processing fee.
  • Avant loans have no early payoff penalties. You won't be penalized for paying your loan off sooner.

Upstart fees 

  • Origination fees range between 0% and 10%.
  • Late payment penalties are 5% of the past-due amount or $15, whichever is higher.
  • There is a $15 fee for returned checks or NSFs.
  • Upstart does not charge an early payment penalty. Based on this, you are not entitled to an origination fee refund.

What are the interest rates?

Avant Loans interest rates 

Avant requires a minimum score of 580. Personal loans from Avant range from $2,000 to $35,000. The terms vary between 24 months and 60 months. Avant offers APRs ranging from 9.95% to 35.99%. APR is calculated using factors such as credit score, income, loan amount, and loan term in every loan application.

Upstart interest rates

Although Upstart requires a 600-credit score, their AI system might approve you with a lower score if you have sufficient income, a decent education, and a steady job. Upstart offers three- to five-year unsecured personal loans. The loan amounts start at $1,000 up to $50,000. The annual percentage rate (APR) ranges from 5.40% to 35.99%.

What are the eligibility criteria for Avant and Upstart?

Avant eligibility criteria  

Borrowers should meet the following criteria to qualify for an Avant personal loan:

  • An American citizen with a Social Security number
  • The applicant has to be a minimum age of 18 years old.
  • The required minimum credit score is 580.
  • A loan offer from Avant depends on your credit history, application information, the intended use of funds, and ability to repay.

Upstart eligibility criteria 

  • The applicant must be a US citizen or permanent resident, at least 18 years old.
  • A full-time or part-time job, providing an income.
  • The required minimum credit score is 600.
  • Debt-to-income ratio is low.
  • There have been no bankruptcies or previous infractions.

Which has a better reputation?

Avant has raised more than $650 million since its inception over the past decade. In the last five years, Avant has lent $3.5 billion to over 500,000 customers. Avant has over 22000 reviews on TrustPilot, with a 4.7 rating.

Avant also has an A+ rating with the Better Business Bureau. Upstart has approved over 60,000 loans and funded over $700 million in lending. 

It is one of the few online lenders that automates loan processing.

Upstart has a 4.9 out of 5 star rating on TrustPilot for its quick and easy online process and exceptional customer service. The lender has a B+ rating with the Better Business Bureau.

Bottom Line: Who should you choose for your loan?

Avant is best for people with bad credit, whereas Upstart offers small loans and quick funding. However, Upstart has received better market feedback. Avant has received some negative reviews because of a 2019 FTC settlement. 

Upstart is a good option for debt consolidation for borrowers with fair-to-good credit. If you have good credit, you should be able to get a lower APR. If you have a lower credit score, you may still qualify for a loan if the lender believes you have a high earning potential. Upstart considers your education, work history, and your credit score. 

Avant is ideal for borrowers with poor credit who require a small loan; it offers loan amounts up to $35,000, whereas Upstart offers loans up to $50,000. Avant is ideal for those looking to consolidate debt or borrow a small amount of money for home improvements. 

Avant is also appropriate for borrowers who prefer to manage their personal loans on their phones. Many lenders do not offer a mobile app for account management.

FAQs

How does the Avant Loans application process work?

Avant may evaluate and verify the information you provided during the application verification process. These include your identity, job, income, and bank account information. 

Every applicant must have their identity verified. A simple way to accomplish this is through electronic knowledge-based authentication (KBA). You are asked a series of questions that only you can answer. This is a standard part of the application process. 

Furthermore, before your loan application can be approved, you may be required to confirm additional details such as your income and banking information. The Avant team manages the process, and will contact you directly if any additional information is required.

Would Upstart be a good fit for you?

It all boils down to a few basic queries:

  • Do you have a good credit rating?
  • Do you have average credit?
  • If so, have you completed your studies within the last four years?
  • Do you have a strong work history?

If you have excellent credit, the loan market is yours, and you can choose any lender and get approved for a loan. The question for people with excellent credit is not whether they will get approval but rather what the interest rate will be. A solid academic record and excellent credit can help you get a low-interest rate with Upstart. Otherwise, you might be able to find another lender that offers a lower interest rate. It's a good idea to use Upstart if you want to arrange for simple monthly payments. 

Upstart may be a good place to start if your credit is average. Lenders like Upstart that consider outside factors when approving loans can help people with average credit or little credit history who frequently struggle to secure a loan.

Can Avant loans be repaid early without incurring penalties?

Because there are no early repayment penalties with Avant, you can make extra payments or pay off the loan early without incurring fees.

You should factor the arrangement fee you paid at the beginning of your loan into your calculations if you plan to switch lenders and pay off the loan earlier.

Is Avant the right choice for you?

Not everyone should use Avant because their interest rates might be too high compared to other lenders, even if you have excellent credit. Before applying for an Avant loan, you must ask the following questions:

  • Do I owe money on my high-interest credit cards?
  • Do I have an urgent need to make a payment?
  • Does my credit not look great? 

The most crucial question is the last one. Avant is a judicious option if you have bad or even average credit and can't get a loan from any other lender. Although they have higher interest rates than other financing options like payday loans, their rates are still lower. Avant is here to help you in an urgent financial situation.

Avant is a fantastic choice if you don't need money right away and want to pay off your high-interest credit card debt. Likely, your credit score isn't impressive if you have a lot of credit card debt. You have the option to consolidate your credit card debt and hopefully pay it off faster and at a lower interest rate.

What types of loans are offered by Avant?

They offer access to standard unsecured and secured consumer installment loans with an Avant spin.

  • Online service with simple interest and equal monthly payments.
  • Personal loans from Avant amortize over time with streamlined, equal monthly payments, like many bank loans.
  • You can look up whether loans from Avant are available in your state.
  • But state regulations, rates, and conditions will apply.

About the author 

Greg Lorenzo

Greg is a financial expert who has been advising his audience on loans for over 10 years. He has a wealth of knowledge and experience in the area, and he is passionate about helping people get the best possible deal on their loans. Greg is an expert in negotiating loans, and he has a proven track record of getting his clients the best possible terms. He is also a strong advocate for financial literacy, and he regularly gives workshops and seminars on the topic.

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