The Upstart credit card debt consolidation
Using Upstart credit card debt consolidation to consolidate your credit card debt into a single loan can be help you accelerate your effort to get out of debt, but only if you do it the right way. Here are the pros and cons to using Upstart. Let’s be positive and start with the pros!
Pros of the Upstart Credit Card Debt Consolidation
Broad range of banks and credit union partners
Upstart is a bit unique in the lending industry. Primarily because they’re not actually a lender. They create the technology that empowers banks and credit unions to lend to customers. They have over 90 banks and credit union partners. One of these will be your actual lender if you apply through Upstart. But, we don’t want to overstate the breath of their network. Over 70% of their loans go to their top two lenders. Still, their process might make it easier for you to get approved, especially if you are not the ideal candidate.
Unique underwriting standards
Upstart claims to consider factors in their approval like education and employment. Every lender has their own proprietary system for determining who to lend money to. It’s no secret that most scrutinize your credit report and assess your debt-to-income ratio. If you have a college degree and a good stable job, Upstart might also give you additional brownie points in their algorithm.
Great interest rate
Another positive thing for Upstart could be their APRs. I say could be because it will really depend on what they offer you. But, their loans have APRs between 7.8% and 35.99%. 7.8% is one of the lowest that is offered in the market right now. If fact, it might even be unbelievably low given where interest rates are. If people are receiving an eight percent APR, it’s only best quality candidates. So, even if you are in pretty good shape, you may not be offered their lowest rate.
Fast process
Upstart says that the decision on whether to lend you money will be made within five minutes of submitting your application. And if you accept the loan, you could have the money in your account as soon as the next business day. So, once you decide that this is something you want to do, you can move pretty quickly to get it taken care of.
Cons of the Upstart Credit Card Debt Consolidation
No direct payoff option
Upstart does not have the option of paying off your credit card balances for you when you take one of the credit card consolidation loans. It’s convenient when a lender will pay off the balances for you. It’s considered a “con” when they don’t for another reason: they are less likely to approve you and less likely to give you the lowest interest rate. Why? Because they can’t guarantee that you will take the money and pay down your other debts. That means they probably don’t consider the debt pay off in their assessment of your debt-to-income ratio.
Cannot add a cosigner
Upstart does not have an option to allow you to add a cosigner to your loan. A cosigner is someone who can be held responsible for repaying the loan. Cosigners can often help you get approved, or be offered a larger loan amount or a lower APR than you could on your own. If you have a spouse or significant other, it might feel natural to include that person as a cosigner, especially if you commingle your finances. Might as well get the benefits of working together. But, Upstart doesn’t have this option.
Fees
Upstart charges a few different fees that you need to be aware of. If you are late on a payment, you will incur either a $15 fee or a charge of 5% of the past due amount (whichever is higher). As sort of a double whammy, you could also get hit with an ACH return fee of $15 if Upstart tried to pull a payment only to find that your account did not have sufficient funds. If you run into trouble paying, the fees could really start to add up.
Origination fee
Upstart charges an origination fee as well. Origination fees are fairly common, although not all companies charge them. Upstarts fees have a very broad range. On some loans they may not charge an origination fee at all, but their highest origination fee is 12% of the loan amount. Twelve percent is a really high origination fee, so you would want to pay particular attention to what they offer you.
There are two things you need to be aware of when it comes to origination fees. First, the fee comes out of the proceeds of the loan. That means that if there is a 5% origination fee on a $10,000 loan, you will receive $9,500 dollars but still be expected to pay back $10,000. The second thing you need to be aware of is that you don’t get a prorated reimbursement of the origination fee. Paying the the loan back early will not reduce the origination fee. So, if you are planning to be aggressive about paying your loan off early (and you should), remember the origination fee Is a sunk cost. If you are offered two loans with the exact same APRs, pick the one with the lower origination fee.
Shop Around
Upstart may be a great option for you, but you owe it to yourself to shop around and make sure you are getting the best deal that you can get. At The Yukon Project, we’ve tried to make shopping around easy. You can visit our marketplace page and apply to one of our premium lenders. Behind the scenes we will check your rate with up to 40 lenders. The application will not affect your credit and we will show you all of the approvals so you can select the loan that is right for you.
Good luck in your effort to pay off that credit card debt. We believe living a debt free life is achievable and will be here rooting you on.
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