Detailed Comparison Across 11 Criteria For Discover Personal Loan vs US Bank Personal Loan. Learn what personal loan is right for you whether you need $1,000 or $50,000.
We’re going to compare personal loans from Discover and US Bank. 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.
Before we get started, let me just say a quick word about each of these companies. 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). US Bank is a retail bank that has locations in 28 states, primarily in the Midwest and West. Both of these companies offer personal loans to borrowers. Let’s see how they compare.
First, we’re going to look at their loan amounts. Discover offers a minimum loan amount of $2,500, which isn’t too bad. That’s a pretty standard minimum loan amount, but US Bank offers a minimum of $1,000. That’s one of the lower minimums. So, if you need just a little bit of money to cover a monthly shortfall, US Bank has more flexibility on the low end.
Discover’s maximum loan amount is $40,000 while US Bank’s maximum is $50,000. But we need to put an asterisk next to US Bank’s number because the maximum loan amount for people who are not already customers is $25,000. Since, I think there are more non-customers than customers, I am going to give this category to Discover.
Discover’s personal loans have terms that range from 3 to 7 years. I am a bit concerned about a minimum loan term of 3 years. That’s just too long for a loan that is only $2,500. So, if you are taking just a little bit of money, make sure you make an extra effort to pay the loan off early, otherwise you will be paying a lot more interest than you should. US Bank lends for terms between 1 and 7 years. And, there’s another asterisk. If you aren’t already a US Bank customer they will not lend longer 5 years. That’s probably okay for a loan that maxes out at $25,000. In both of these cases, if you get a seven year loan, do your best to make extra payments in the first year of the loan. If you do that, you will save a lot of money on interest and significantly shorten the time you are in debt.
Both Discover and US Bank are fairly restrictive on who they lend to. Discover and US Bank lends to people who have Good-to-Excellent credit, say credit scores of 660 or higher. And there’s another asterisk! US Bank says that they will not lend to non-customers with credit scores below 720. That’s really restrictive!
Now let’s look at the cost of the two loans. Discover’s lowest APR is 7.99% and US Bank’s is 8.74%. These are both pretty low in the industry right now, but Discover get’s highlighted because it is the lowest. Both Discover and US Bank cap their maximum APRs at 24.99%. I am not going to highlight either of them for the maximum APR because while that’s a pretty good top rate, it isn’t the best for people who have Excellent credit.
Neither bank will charge an origination fee on their 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 that the best way of saving money on the loan is to make extra principal payments.
If you are late on a payment, Discover will charge you $39. That is the highest late fee in the industry. US Bank is not clear on whether they charge late fees, but I suspect that they do. I don’t love the lack of transparency.
Discover does not accept cosigners on their loans, but US Bank does. They called them calls it secondary loan applicants during the application and a co-borrower during the loan period. A cosigner is someone who agrees to pay off your loan if you fail to repay it. If you can qualify for the loan that you need, there is little reason to entangle a loved one in the process. But, if you have a spouse or loved one that has a stronger credit profile than you do, add them as a cosigner might make all the difference in getting the loan you need. It’s good that US Bank offers this option.
If you are using the loan to consolidate credit card balances of other debt, Discover will directly pay off those other creditors with the proceeds of the loan for you. US Bank, on the other hand, will not. It’s convenient when a lender will do that, but it also shows that the lender knows that the loan will replace other debts and not stack on top of them. Because of that, the new loan won’t change your debt-to-income ratio. That should make it easier to be approved by them. Discover gets credit for giving customers this option.
If you are using the loan to consolidate other debt, you need to know that Discover will not let you use the proceeds to consolidate balances from Discover credit cards. So, if you do have Discover credit card balances you’d like to consolidate, you will either need to find another lender or ask for extra money and use it to pay down Discover credit card balances.
We’ve already mentioned that US Bank has quite a few restrictions for applicants who are not already a US Bank customer. Non-customers must have a higher credit score to be approved. They can’t borrow as much and they can’t borrow for as long.
Let’s summarize what we’ve learned about personal loans offered by Discover and US Bank.
Discover and US Bank both have their fair share of green cells. US Bank would have more of them if they offered the same benefits to non-customers that they do to customers. So, if you are a US Bank customer, it might be the better option for you. If you are looking to consolidate other debt, each of these companies has advantages: US Bank gives no restrictions on what you can consolidate; Discover will directly pay off other debts, as long as those debts are not on Discover credit cards.
But, usually, the most important thing about selecting a lender is whether they will approve you for the money you need at the lowest possible APR. Each lender will have different criteria for deciding whether to approve you, how much to offer, and at what rate. 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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