Avant vs. Upstart

Avant vs. Upstart loan offerings

Both Avant and Upstart are among the best online loans for those with poor or no credit history. Both lenders offer convenient online applications and servicing, along with flexible terms for borrowers who may not be able to qualify for a loan from a major bank or lender.

Here’s a brief summary of each lender:

• Avant offers personal loans and credit cards to those with credit scores as low as 550. While APRs are high, ranging between 9.95 and 35.99%, fast funding and availability of loan amounts as high as $35,000 make Avant personal loans an attractive choice for those who can’t get a loan elsewhere.
• Upstart offers personal, debt consolidation and auto loans, and it can approve borrowers with steady income even if they have no credit history. This lender uses a unique AI tool to assess creditworthiness, taking into account factors like income, education and job history to qualify borrowers for loans ranging between $1,000 and $50,000.

Avant vs. Upstart rates and fees

Potential borrowers should be aware of interest rates and fees before applying for a loan with either Avant or Upstart.

Origination fees

Both lenders charge origination fees, but Upstart’s maximum is higher than Avant’s. Both Avant and Upstart deduct these origination fees from your loan proceeds before they are disbursed, which lowers your total loan amount. You’ll need to account for this when requesting the loan amount.

APRs

Both Avant and Upstart offer loans to those with poor or no credit, which naturally means they’ll charge higher annual percentage rates (APRs) in order to offset the increased risk inherent in their loan products. Avant’s lowest rate is slightly higher than Upstart’s, which makes Upstart a slightly better choice for well-qualified borrowers.

Compare total loan costs

Before picking a lender, make sure Upstart’s higher origination fees don’t cancel out its lower starting rates.

Late fees and penalties

Avant charges a flat $25 for late payments, while Upstart has adopted a sliding scale methodology of $15 or 5% of your outstanding loan balance, whichever is greater. As such, the size of your loan is a major factor when deciding which lender has the better late fees policy.

Avant vs. Upstart eligibility criteria

Both Avant and Upstart offer loans to borrowers with poor credit or no credit history, but they use different methods to evaluate applications.

Avant

If your credit score is very poor, Avant might be the best choice for you. The company is known for accepting applicants with scores as low as 550. Your chances of being approved are good if you have a bank account in good standing and can demonstrate a $1,200 monthly net income from just about any source (income, alimony, child support, etc).

Avant uses traditional underwriting methods and doesn’t allow for a co-signer or co-borrower in order to enhance your odds of approval. Avant loans are available in all states except the following:

• Colorado
• Hawaii
• Iowa
• Maine
• Massachusetts
• New York
• Vermont
• Washington
• West Virginia

Upstart

Upstart is a legitimate lender that uses artificial intelligence to evaluate creditworthiness. It’s a great option for those with no credit history at all, such as teens or those just entering the workforce.

This lender considers factors like job history and education in determining whether to approve your loan request, rather than more traditional factors like income and credit score. Upstart is available in all 50 states.

» READ MORE: What to know before borrowing money

Avant vs. Upstart application process

Both Avant and Upstart are online lenders that cater to borrowers with less-than-ideal credit histories and FICO scores. Both companies offer a simple, online application process and strive to disburse funds quickly, often the very next business day, if your loan is approved.

Here’s a breakdown of the application process for each lender:

Avant application process

1. Go to Avant.com.
2. Choose a credit card or loan option.
3. Click “Check loan options.”
4. Fill out the application with income and expense details.
5. Review your approval and loan terms.
6. Submit any required documents.
7. Receive funds, often the next business day.

Upstart application process

1. Visit Upstart.com.
2. Click “Check your rate” for a soft credit inquiry.
3. Enter your desired loan amount.
4. Select the loan purpose.
5. Provide basic details like name, income, education and employment.
6. Review the loan offers presented.
7. Accept the offer that works for you.
8. Upload the requested documents.
9. Undergo a hard credit inquiry for final approval.
10. Receive funds, often the next business day.

Pros and cons of Avant and Upstart

Both Avant and Upstart have strengths and trade-offs. Which one works best for you will depend on your credit profile and borrowing needs.

Avant

If you’re in dire need of money but your credit isn’t in good shape, Avant is a good choice. The company approves loans for borrowers with credit scores as low as 550, as long as you can have a monthly income of at least $1,200.

Avant often provides next-day funding after approval and does not charge prepayment penalties. Borrowers also get up to five years to repay, which can make monthly payments more affordable.

But there are drawbacks, of course. You’ll likely have a high APR through Avant, along with steep origination fees (up to 9.99%). This lender doesn’t permit co-borrowers, leaving few alternatives if your application is denied. It’s also not available in nine U.S. states.

Upstart

Those with little to no credit history will benefit from Upstart’s unique, AI-based underwriting model. Here, you can submit proof of job history, education and current income in the hopes of being approved, rather than just your credit history and FICO score. Upstart boasts a high loan limit of $50,000 or more, making it a great option for large expenses, and nationwide availability.

However, like Avant, you’ll likely have a high APR with your loan, and a large origination fee as well. Upstart’s origination fee can be as much as 15% of the loan value and is taken out upon disbursement of funds, so you’ll have to take this into account when you request your loan amount. Also, Upstart only offers two repayment periods: three years or five years.

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