In today’s market, non-traditional lending has become a feasible option for individuals who need cash but do not want to go through the traditional lending process. Upstart and SoFi are two alternative lenders which offer personal, unsecured loans to individuals who meet their eligibility criteria. Let’s compare their services to help users choose the right option depending on their financial needs.

What is Upstart?

Founded in 2012, Upstart is a popular online lending platform for personal loans. It evaluates loan applications with artificial intelligence and matches potential borrowers to partner lenders. Aside from the typical credit scores, Upstart also considers other factors like users’ employment history and education.

If you want to know more about Upstart, read a full review here.

What is SoFi?

SoFi is an online lending platform offering unsecured personal loans in every state except Mississippi. It provides loans from $5,000 to $100,000 for terms ranging from 2 to 7 years. Borrowers can use the loan for personal, household, or family purposes, with the loan proceeds credited to the account within a few days of approval.

What do they both offer?

Upstart and SoFi offer personal loans to potential borrowers without any collateral. This means they consider various parameters like financial and residential status, any outstanding debt, among others, to determine the borrower’s eligibility.

The funds obtained can be used for a variety of purposes like debt consolidation, home improvement, credit card consolidation, medical emergencies, among others. Loans cannot be used for investment in real estate or securities or the purchase of illegal drugs.

Both offer competitive market rates for their loans, except in a few restricted states.

Neither imposes any penalty for prepayment of the loan amount before the due date. Borrowers are free to pay off their loan amount prior to the end of the loan term.

Both have been in business for more than a decade, helping potential borrowers in getting the best deals for their personal loan requirements.

What is Upstart's unique offer?

Hardship Program

Upstart offers their hardship program in which borrowers are allowed to temporarily suspend loan payments in case of any economic crisis like job loss. The interest continues to accrue during the suspension period.

What is SoFi’s unique offer?

SoFi offers its customers a wide range of benefits:

Autopay discount

Borrowers opting for the autopay mode are entitled to a 0.25% Annual Percentage Rate (APR) reduction.

Unemployment protection

Prospective borrowers should demonstrate that they are receiving unemployment benefits besides actively searching for a job. They should also agree to work with SoFi’s career strategy service. Borrowers who are approved for unemployment protection can pause their loan payment for a period of 3 months up to a maximum of 12 months. The interest continues to accrue during the suspension period.

Flexible payment date

Borrowers have the option of changing their payment date once per year. This is beneficial for users whose employers have a unique payment schedule or if the borrower prefers cluster bill payments around any specific date.

How do their fees compare?

Upstart Fees

Unlike several lending platforms, Upstart does not provide any discount to its customers who choose the autopay mode. The service provider imposes a one-time origination fee of between 0% to 8% that is deducted from the loan proceeds. In case of any delay in payment of installment beyond 10 calendar days from the due date, there is a late fee of 5% of the dues or $15, whichever is higher.

An unsuccessful payment due to insufficient funds or any other reason will lead to a penalty of $15 per occurrence. For requests for a physical copy of the records and withdrawal of eSign content, Upstart imposes a fee of $10 per paper copy.

SoFi Fees

SoFi does not charge any origination fee. While late payments will result in high-interest accrual, there is no late fee imposed on the borrower. Also, there is no prepayment penalty for paying off the installment or the loan amount before the due date.

Interest rates

Upstart

The APR for personal loans ranges from 5.4% to 35.99% which mainly varies depending on the period the loan is taken. There are only two loan terms offered by the service provider, 3 years and 5 years.

SoFi

SoFi offers an APR ranging from 6.99% to 22.23% including an autopay discount of 0.25%. The maximum interest rates are lower in states like Texas, Virginia, Illinois, Alaska, Connecticut, and Colorado, among others. The applicable interest rate depends on several factors including the loan terms, loan period, and financial status of the borrower, among others. The personal loan terms range between 2 and 7 years.

Eligibility compared

Upstart has the following eligibility criteria:

  • Should have a US residential street address
  • Must have a full-time job or a job starting in six months or a regular part-time job, or any other verifiable source of income
  • Should have made timely payments during the last six months on any loans outstanding at the Upstart platform
  • If the borrower has a credit history, should have a credit score of 600 or higher
  • Should not have more than 5 credit inquiries during the past 6 months, other than inquiries on student loans, mortgages, or auto loans

SoFi has the following eligibility criteria:

  • Must be at least 18 years or older
  • Borrowers can be from any state other than Mississippi
  • For permanent resident or visa holders, there should be at least 2 years remaining before the status expires
  • Should have a low debt-to-income ratio
  •  Must have a credit score of at least 650
  • Should be either a US citizen, a permanent resident, or a non-permanent resident alien
  • Must be employed with sufficient income or have a written offer for employment to start within 90 days

It’s important to note that meeting the above criteria will not guarantee loan approval.

Which has a better reputation?

Upstart has been given an excellent rating of 4.9 out of 5 by TrustPilot based on reviews of more than 35,875. The service provider has also received decent ratings across several other online platforms. The positive reviews are mainly due to the ease of the application process and the credit card consolidation loan of the platform. On the other hand, issues related to bill payments, Covid-19 or Wuhan virus-related assistance, and customer support are some of the issues that contribute to the platform’s negative reviews.

SoFi has been in the market since 2011, serving more than 2.5 million satisfied customers and funding loans of over $50 billion. It has a rating of 3.6 on TrustPilot based on 2,721 customer ratings. The positive reviews are mainly because of the ease of the application process, dedicated customer support service, and the speed of funding. The negative reviews are related to customer support and turnaround time.

Final Thoughts

The suitability of the two online lenders will depend on the borrower’s requirements. SoFi is a better option for individuals with a good credit score who are looking for a relatively higher loan amount. Upstart caters to people with lower credit score or inadequate credit history. This service provider is known to provide quick access to funds of lower amounts as compared to SoFi.

When it comes to loan terms flexibility, SoFi is a better option since it offers repayment periods ranging from 2 to 7 years. Upstart only has two payment plans, 3 years and 5 years.

While Upstart imposes a high origination fee, SoFi offers fee-free loans to borrowers with a sound credit score. So, it’s worth checking the loan terms and conditions of both service providers to ensure the best loan offer.

FAQs

Are Upstart and SoFi reliable?

Both have been in business for more than a decade and served billions of customers. Over their service period, they have obtained positive reviews across multiple platforms that attest to their reliability.

Does a personal loan from Upstart or SoFi affect your credit score?

Yes! Obtaining a personal loan from either Upstart or SoFi is likely to affect your credit score. Moreover, during the pre-approval process, the service providers make a soft credit pull, though this does not significantly affect the credit score. While it will have a negative impact on the credit score at the time of application and the approval process, this can prove to be beneficial in the long run if the loan amount is paid off on time.

How long does it take to receive funds?

Upstart ensures that the loan amount gets credited to the account of the borrower as soon as the next business day after approval of the application and signing of the loan agreement. However, the funding time can be longer than a few days at the SoFi platform if the loan amount is more than $20,000.

Are personal loans at SoFi secured or unsecured?

All personal loans offered at the SoFi platform are unsecured which means that borrowers need not provide any collateral for the loan taken. Only factors like residential status, existing loans, the financial status of the borrower, among others, are factored in for granting a loan to prospective borrowers.

Are the services of Upstart and SoFi the same?

Both Upstart and SoFi are technology-focused financial companies. But they are different businesses with varying motives. The mission of Upstart is to provide credit access to deserving individuals who are unable to obtain loans using traditional channels. SoFi aims to provide competitive lending options to potential borrowers by providing better loan terms than banks and financial institutions.

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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