Avant vs. Upstart: Which offers better personal loans?

Getting approved for a personal loan with bad credit often means jumping through a few hoops. But it doesn’t have to be this way.

Avant and Upstart are online lenders with more flexible credit requirements to help you access the funding you need. Avant is based in Chicago and offers credit cards and loan products. Upstart is an online lending platform that shops your information around to lenders in its network to find you the best deal on a personal loan.

Avant vs. Upstart at a glance

Avant is a direct lender, while Upstart lets you view multiple loan offers and find the best fit in one sitting. Below is an overview of the key features of each so you’ll know what to expect should you apply for funding.

Avant personal loans

Rating: 4.7 stars out of 5

4.7

Learn more in our Bankrate review

• Pros and cons

  

  Pros

  • Caters to low and fair-credit borrowers.
  • Easy to manage your loan with its mobile app.
  • Fast funding.

  

  Cons

  • Not available in all 50 states.
  • Steep loan administration fee.
  • No co-borrowers permitted.

• Bankrate's view

  Avant features unsecured personal loans with fast funding speed. Its loans cater to borrowers with bad or fair credit, and you can use the proceeds to fund home renovations, consolidate debt, cover unplanned expenses or however else you see fit.

  You’ll find that they share many similarities with Upstart’s personal loans. That said, the minimum loan amount is slightly higher, and you can opt for a shorter loan term to keep the cost of borrowing down. However, Upstart allows you to borrow more if you need to fund a costly expense or consolidate higher debt balances.

  Avant also charges an administration fee that’s a little on the higher end — though not as high as Upstart’s potential origination fee. A higher credit score means this may not be a cause for concern. Otherwise, it could eat into the loan amount disbursed to you since the administration fee is deducted from the amount you borrow.

Upstart personal loans

Rating: 4.8 stars out of 5

4.8

Learn more

• Pros and cons

  

  Pros

  • Accessible to borrowers with no credit.
  • Low starting APR.
  • Next-day funding.

  

  Cons

  • Loan origination fee.
  • No co-signers or co-borrowers.
  • Limited loan term options.

• Bankrate's view

  Upstart is an online lending marketplace that connects prospective borrowers to banks and credit unions in its extensive network. The platform partners with lenders that make loans available to borrowers with limited credit history by using an artificial intelligence (AI) model to assess more than just a person’s credit. Because of how its AI model works, it’s possible to access a loan with no credit score.

  The accessibility comes at a cost in the form of a hefty loan origination fee. Upstart also falls short in terms of flexibility. You could be eligible for a sizable loan amount, but there are only two loan terms to choose from. Still, the low starting APR could compensate for the drawbacks if you have good or excellent credit.

How to choose between Avant and Upstart

Avant and Upstart feature flexible eligibility guidelines for unsecured personal loans. You may qualify for funding with less-than-perfect credit, and the maximum APR is capped at 35.99 percent. And while that number is higher than good credit lenders, it’s significantly lower than you’d find with payday loans or other expensive options.

That said, the loan ranges vary between the lenders. There are also other borrowing costs to consider when evaluating the differences between the two to choose which is most ideal for your financial situation.

Avant is better for borrowers with bad or fair credit

Although Avant states on its website that most borrowers have a credit score between 600 and 700, 550 could be enough to get you approved for an unsecured personal loan. You could also save a bundle by choosing Avant over Upstart, as its maximum administration fee is less than half of what Upstart charges. However, its higher starting APR may be a problem if you apply on the lower end of its credit score requirement.

Upstart is better for rate shopping

A credit score of 550 or higher could work with either lender, but Upstart shops your information to its partner lenders that consider applicants from all credit backgrounds. This means you could get approved even with a minimum credit score of 300 or if you don’t have enough credit history to generate a score.

Upstart could also be the better option if you’re on the other end of the credit spectrum with an excellent score. The starting APR on personal loans is only 6.40 percent, a fraction of the industry average of 13.50 percent for borrowers with good or excellent credit.

Compare lenders before applying

Check your rates with Avant and Upstart before applying for a personal loan. Both lenders offer online prequalification tools so you can view potential offers and compare loan quotes to identify which is best. It’s also worth getting quotes from other lenders to ensure you’re getting the best deal on your loan.