Detailed Review: Who’s got the better personal loan for you!? Citibank Personal Loan or Discover Personal Loan?
We’re going to compare personal loans from Citibank and Discover. We’ve spent years working in the lending industry and we track dozens of lenders. We want to break down these two lender so you can see which one might be better for your situation.
Just a quick note about each of these companies. Citibank is the retail banking division of Citigroup, the fourth largest bank in the United States with total assets of $1.68 trillion dollars. That’s a lot of zeroes. Discover is primarily known as a credit card company. It’s cards run on its own network (and not on either of Visa or Mastercard).
The first thing we are going to look at is the loan amounts that they offer. Citibank offers loans as low as $2,000 and Discover offers a minimum loan amount of $2,500. So, if you are looking for just a little bit of money to cover an emergency, Citibank offers a little more flexibility on the low end. If you are looking for a more substantial amount of money, Citibank will lend as much as $30,000, but Discover will lend as much as $40,000. So, Discover wins on the higher end.
Citibank’s terms go up to 5 years, while Discover will lend between 3 and 7 years. Seven years is a long time to carry debt, so you will want to be careful not to be enamored by a low monthly payment that will keep you paying interest much longer than you should. And, frankly, three years is too long for smaller loans. Regardless of what your term is, make extra principal payments in the first year. That will save you a lot of money on interest in the long run.
Now let’s look at the cost of the two loans. Citibank’s lowest APR is 10.49% and Discover’s is 7.99%. 7.99% is one of the lowest in the industry right now, so Discover gets highlighted. Citibank’s maximum APR is 20.49%. That’s not the best out there right now, but it’s actually pretty good. Discover’s maximum is 24.99%. So Citibank gets credit for the lower top rate.
Neither Citibank nor Discover will charge an origination fee on their personal loans. In terms of context, I would say about half of all lenders don’t charge an origination fee. It’s great that they don’t charge an origination fee; it means that the full cost of the borrowing is wrapped up in the interest rate. That’s good because it means you can save more money on the loan by making extra principal payments.
Citibank offers a couple of discounts that can help you lower your APR. They offer a discount if you sign up for autopay for your monthly payments. They also offer a discount to their priority customers, but I am not sure whether that is valid for most people because to be a priority customer, you have to have a certain amount of money in Citibank accounts. If you have the money to be one of those customers, you probably don’t need to take out a loan. Discover does not offer any discounts. So, we’ll highlight Citibank in this category.
Both Citibank and Discover lend to people with Good-to-Excellent credit. I would think you would struggle to get approved if your credit score was below 670, but that’s just a guideline. Most lenders don’t make a decision on credit score alone. They build proprietary algorithms that use things like debt-to-income ratio, payment history, income, and other financial data. The point is that these lenders are going to be rather restrictive.
Neither Citibank not Discover accepts cosigners on their personal loans. A cosigner is someone who agrees to pay off your loan if you fail to repay it. If you have a spouse or loved one that has a stronger credit profile than you do, adding them can improve your chances of being approved, getting more money, or a lower rate. Unfortunately, neither of these lenders offer that option.
If you are using the loan to consolidate other debt, both Citibank and Discover will use the proceeds of the loan to pay off your other creditors. It’s convenient when a lender will do that, but it’s good for another reason. It shows that the lender understands that the new loan will replace other debts and not stack on top of them. That means that the new loan won’t make your debt-to-income ratio worse. That should make it easier to be approved by them. I will highlight both of them for offering this service.
Speaking of consolidating your debt. Both Citibank and Discover offer exclusions. They will not use the proceeds of the personal loans to pay off credit card balances from their own company. You can get around this a bit if you ask for additional money and pay down the balances yourself. But, then your debt-to-income ratio will not look as good on the application.
Let’s summarize what we’ve discussed about the personal loans offered by Citibank and Discover.
Both Citibank and Discover have their fair share of green cells. Citibank offers lower loan amounts and Discover overs higher loan amounts. Discover has a lower minimum APR but Citibank has a lower maximum APR. Neither will charge an origination fee. Citibank offers discounts that Discover doesn’t. Both will directly pay your creditors when you are consolidating. And finally, they both restrict consolidating balances from their credit cards. Overall, I think both would be pretty good lenders. Of course, for many people, the most important thing is whether they can get the money they need at the lowest possible APR. That’s why we always recommend that before you accept a loan, you should shop around. Find the best deal. At The Yukon Project, we’ve tried to make shopping around easy. If you visit our marketplace page, you can apply to any one of our other featured lenders. Behind the scenes, we will check your rate with up to 40 other lenders. Our partners use a soft credit check, so applying won’t hurt your credit score. We will show you all of the approved offers so you can pick the loan that’s best for you.
If you have any questions about either of these lenders that we didn’t cover, leave a comment below. If you found this video useful, please like it and subscribe to our channel. Thanks for watching.
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