You might know Discover for their stints with credit cards, but do you know they also lend? In fact, Discover is a huge lender when it comes to personal loans. They offer flexible repayment methods and options as well as online applications for convenience.
However, this lender takes keen interest in offering loans to those seeking to consolidate their debts. On top of that, they offer various convenient ways to deal with your creditors on your behalf.
In this article, you’ll learn about Discover Personal Loans, who qualifies for the loans, how to begin the application process and what you can look out for after you get a loan from Discover. Afterward, you can decide whether this lender is a good fit for you.
Discover Personal Loans
They may not offer huge loan amounts, but Discover can extend loans starting from $2,500 to $35,000. The interest rates also range from 6.99% to 24.99% APR.
Discover loans come at a fixed rate which means you don’t have to worry when it comes to monthly payments. They won’t change. Since they’re personal loans, it means they are unsecured. You don’t need any collateral to secure a loan.
What’s more is Discover offers friendly repayment terms and periods. You can start at 36 months and you can get a repayment period extending to 84 months. With such a wide range of options in repayment, you can choose whether you’d like to repay the loan faster or you’d prefer spreading the amount over a long period.
In addition, Discover doesn’t charge any prepayment penalties or closing fees. Also, you can choose how you want to use the personal loan including major purchases and debt consolidation among others.
The Borrower’s History
When it comes to the borrower’s profile, Discover checks for credit scores. The latter should stand at no less than 660 for any borrower. However, the customer’s score on average stands at 750 which is at least 100 more than the minimum. The income requirement also stands at a minimum of about $25,000.
Note: Many borrowers earn way above the stated minimum. Therefore, it becomes difficult to measure how likely you are to get your application approved if you meet the minimum requirements.
There are other factors that Discover takes a look at in the application process. Besides, your annual income and credit score, Discover will analyze your credit history and activity not forgetting making inquiries to decide whether you’ll get approved and the rates you’ll get.
How to Apply for a Discover Personal Loan
This is the best part. Discover takes only a single day to decide whether you qualify for a loan or not. The same goes for the approval process. Furthermore, you don’t need to visit any physical office to go through a tedious form-filling process. Everything is done online via your mobile phone or computer. You don’t even need to be a customer to apply for a loan.
First off, begin by entering the loan amount you need as well as the payment terms that suit you best. At this point, you can receive an estimate of the rates you’ll get after you complete a soft credit pull. Inquiries will pop up at this point, but don’t worry about them.
If the terms of payment and the rates make you happy, you can begin a formal loan application process by providing basic financial and personal information. While doing this, Discover will perform a thorough check on your credit report. The latter does contribute to your credit score.
At this point, you might get a call from one of the loan specialists at Discover to verify and validate the information you provided as well as finalize your offer. As long as you provide correct information and adhere to the rules of application, you can get a Discover personal loan within the same day of application.
What Next After Approval?
Your funds will be transferred to your account on the following business day once you have signed the loan agreement. The period, however, will depend on your bank. It can take longer.
Other factors that determine when you’ll receive your funds include:
- The day of the week you submitted your application
- How the funds will be transferred
With all these factors combined, the process could last well up to a week from approval, disbursement to when you receive the funds in your account.
You can access the autopay program by Discover for free after your loan approval is successful. The autopay program, as the name suggests, will automatically debit your selected amount from your preferred account on a certain date of the month.
Keep in mind that late payments can attract a heavy late fee of $39, so you have to make sure that you do everything in order to pay before the deadline expires.
You can also pay your monthly payments using a check. Don’t worry, Discover doesn’t apply any charges to process checks. You can also opt for other repayment options like paying via the mobile phone or online.
Discover also reports to other credit reporting agencies like Experian, TransUnion, and Equifax. If you make all your payments on time, you will benefit from a good credit score.
Special Features from Discover
One of the best features from Discover is the ability to return a loan within 30 days. At times, you might take out a loan without thinking through the process of repayment and why you took out the loan in the first place. This is known as borrower’s remorse.
Discover understands this and therefore, allows you to return the funds of the loan without paying any interest within a period of 30 days. It doesn’t get any better than this.
Moreover, Discover offers flexibility when it comes to loan repayment. They allow you to change your payment due dates a maximum of 2 times during the loan repayment period. However, this option comes with one restriction. You’ll have to wait for no less than a year between when you last changed the due date.
Despite the restriction, this feature is advantageous because you can hit a snag in cash flows during the loan period.
Since Discover allows you to use your personal loan on other matters such as debt consolidation, Discover can cover your debt by paying your creditors.
Discover has issued personal loans to more than half a million people. This is thanks to their wide reach in the U.S. The lender is available in 50 states.
Discover not only offers credit cards and personal loans but also student loans, mortgages and saving products.
What to Consider Before You Take Out a Personal Loan from Discover
Before taking out a personal loan, you need to dig deep and conduct a thorough research on various aspects of your finances. If you don’t know what to search for, here are a few pointers to guide you before you approach Discover for a personal loan.
Scrutinize your Credit Profile
Take a look at your credit score and ensure you score fair to higher. Discover takes keen interest in this area. Therefore, if you had a turbulent financial past or you’re new to building credit, then applying for a Discover personal loan isn’t the best move.
However, thanks to a slight analysis of your credit report, you can get a pre-approval meaning you don’t have anything to lose by finding out if you qualify.
If you get approved, you have access to fantastic features that will elevate your financial status including building a credible credit score that can open new doors in terms of loans. One of the features is the autopay feature from Discovery.
This feature keeps tabs with all monthly payments by paying them automatically and on time depending on your preferences. Besides, if you encounter difficulties along the loan payment period like loss of a job, you can change due dates to help you re-organize your finances.
How Will You Use Your Debt?
Many borrowers who take out loans from Discover use the loans to repay various debts to a lender or paying credit card debts. Apart from Discover offering the most competitive rates in the market to borrowers with good credit, Discover also tops it off by directly paying off your creditors.
However, before you go ahead and take out a loan with the intention of consolidating debts, you have to question yourself. How did you get into this debt in the first place? Also, what strategies have you put in place to ensure you won’t end up in a similar situation?
Acceptable debts include high medical expenses or a long unemployment period. Such situations are unavoidable sometimes and it is possible for the expenses during this period to skyrocket, thereby dwarfing your income.
But if you got into debt because of poor spending habits, it’s time you make certain changes in your lifestyle. You can begin by restricting yourself from using credit cards. The ultimate goal is to create an environment where you can thrive instead of setting up yourself for a downfall.
Do Your Research on the Best Personal Loan
Contrary to popular belief, shopping around for a personal loan doesn’t affect your credit score. Once you get a pre-approval, you can start the hunt for the best deal around. A number of offers exist from other lenders. Take advantage of them.
The best part about all these lenders is they attend to different borrowers. Starting from your credit history to the type of loan you need. Besides that, they also use different techniques to approve loan applications.
Even if you’re pressed for time, there’re so many lenders out there with offers that can suit your need. Spare some time to conduct a proper research in order to save some money.
- Prosper: Prosper offers loans of up to %35,000 and they don’t charge if you pay off your loan faster. You’ll, however, have to pay origination fees, but the repayment extends from 3 to 5 years although Prosper will choose the exact timeframe.
- You’ll also need a credit score of at least 640 for approval. Your interest rates could be between 3% and 36% depending on your creditworthiness. For those with stellar credit, Prosper is a good choice, but a bad one for those with poor credit.
- LendingClub: This is a peer-to-peer lender offering loans of a maximum of $40,000. The interest rates aren’t far off from Discover’s. borrowers with a bad credit will have to endure a high APR of 35.89% while those with a good credit will enjoy an APR of 6.16%. in addition, Lending Club requires you to score at least 660 on FICO which is quite far for many borrowers.
- One Main Financial: From this popular lender, you can secure a personal loan of up to $30,000. An interesting bit about this popular lender is the lack of a minimum credit score when applying. This is a fantastic option if you’ve had no success with other lenders.
- The interest rates are quite high for those with a good credit, but for the borrowers with a poor credit, the rates remain at 35.99%.
- Wells Fargo: You’ll want to choose Wells Fargo if you need a bigger loan. This lender allows loans starting from as low as $3,000 to as high as $100,000. Even better is the absence of prepayment and origination fees.
After approval, you can get funds deposited into your checking account. This is one of the advantages it has over Discover. In addition, if you hold a checking account with Wells Fargo, you can benefit from various discounts which can help lower the monthly payments.
Personal loans offer various benefits to borrowers depending on the lender. One of them is no need to put up collateral for the loan and Discover is one lender offering these loans. You also get to enjoy flexible and competitive interest rates.