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This lender particularly caters to those in search of a debt consolidation loan, offering a few different perks to help you through the process. Learn more about who qualifies, how to apply, and what to expect once you take out a loan with Discover. Then decide if it’s a good choice for you.
Discover Personal Loans
While not the highest loan size you’ll find, Discover offers loans from $2,500 up to $35,000. Rates vary between 6.99% and 24.99% APR. All loans are fixed rate, so there’s no need to worry about your monthly payment amount changing at any point. They’re also all unsecured loans, meaning you don’t have to put up any collateral.
A unique feature about Discover loans is that the company offers a broad range of repayment terms, starting as early as 36 months and going all the way up to 84 months. That leaves you with plenty of options, whether you want to quickly repay a small loan or spread out a larger loan amount over an extended period of time.
Another bonus from Discover is that there are no closing fees or prepayment penalties. Plus, you can use your personal loan for a variety of reasons, including debt consolidation, major purchases, and life events.
Discover requires a credit score of at least 660 for all borrowers; however, the average loan customer’s score is a 750 — nearly 100 points above the stated minimum. The minimum income requirement is also low, set at just $25,000. Again, most current borrowers make more than that, so it’s difficult to gauge the likelihood of having your application approved if you’re close to any of the minimum requirements.
Other factors, of course, are weighed heavily during the application process. In addition to your credit score and your annual income, Discover also looks at your credit history, activity, and inquiries to determine whether you’re approved and what kind of rates you’ll receive.
Discover offers a convenient same-day decision so you don’t have to wait to find out whether or not your application has been approved. You can apply for a personal loan either online or by phone, even if you’re not a current customer.
Start by entering your desired loan amount and the payment term you’re interested in. You can get an estimate of your offered rates at this point, with Discover only completing a soft credit pull. Don’t worry about any inquiries showing up on your credit report at this point.
If you like the rates and terms you receive, you can then formally apply for the loan by entering your basic personal and financial information. At that point, a hard check will be performed on your credit report which does have a slight impact on your credit score.
You may also receive a call from a loan specialist to verify your information and finalize your offer. It’s easy to be approved for a Discover personal loan on the same day you apply, as long as your application materials are complete and accurate.
Once You’re Approved
After you sign the loan agreement, your funds are then transferred to your bank on the next business day. However, it might take a little longer to actually receive the money in your account, it just depends on your bank. Depending on what day of the week you submit your application and how you want your funds disbursed, the entire process can take as long as seven days to receive your money.
Once your loan has gone through, you can enroll in Discover’s autopay program for free. This service allows your payments to be automatically debited from your chosen account on the loan’s due date each month. If you miss making your payment by the deadline, you can be charged a hefty late fee of $39 so make your best efforts to get that payment submitted on time each month.
Unlike many other lenders, Discover doesn’t charge a check processing fee. Your other payment options include submitting the balance online or over the phone. All of your on-time payments are reported to Equifax, Experian, and TransUnion, giving your credit score a bump just by repaying your loan on time.
When you take out a loan from Discover, you don’t have to worry about suffering from borrower’s remorse. If you’re unsatisfied with your loan or change your mind for some reason, Discover actually allows you to return the loan funds within 30 days without paying any interest.
You also get some flexibility even when you complete the loan process by being able to change your payment due date up to two times throughout the life of your loan. However, you do have to wait at least one year between the two updates. This can be a great feature to take advantage of in case your cash flow calendar changes at any point.
A final service offered by Discover is for borrowers using their loan funds to consolidate debt. Discover can pay off your creditors on your behalf, creating a smooth and streamlined process that gets the job done quickly.
Over half a million borrowers have used Discover for their personal loans. And unlike many other online lenders, Discover loans are available in all 50 states. In addition to personal loans and credit cards, Discover also offers saving products, mortgages, and student loans.
Things to Consider Before Taking Out a Discover Personal Loan
Don’t jump into any personal loan without first conducting a little bit of research. Here are a few tips to consider before applying for a Discover loan.
Look at your credit profile
Discover personal loans do require at least a fair credit score, if not higher. So if you’re new to establishing credit, or have had a rocky financial past, a Discover loan may not be your best bet. However, since you can get pre-approved with just a soft check on your credit report, you have nothing to lose by seeing if you qualify.
If you do get approved, there are plenty of great features to help keep your finances on track and continue building your credit score on an upward trajectory. Take advantage of Discover’s autopay to keep up with your monthly payments on time. If you change jobs and get a new payday, don’t forget to switch your loan’s due date rather than struggle to make your payments on time.
Consider how you utilize your debt
Many Discover borrowers use their personal loans to pay off credit cards and repay their debt to a single lender. Not only does Discover offer competitive rates for borrowers with high credit, particularly compared to credit card APRs, but there’s also the added benefit of having your creditors paid off for you.
But before you choose a loan for debt consolidation, think about how you got into debt and how you’ll stay out once you pay off your loan.
A lot of people find themselves in debt because of exorbitant medical bills or a period of unemployment. In those instances, it’s no surprise that each month’s bills could outweigh your income. But if you’re in debt because of your spending habits, it’s time to make a change.
Start off with a little tough love by hiding your credit cards from yourself or even cutting them up. The last thing you want to do is consolidate your debt just to start charging up more on top of paying off your personal loan. Don’t set yourself up for failure; instead, create an environment that helps you succeed and avoid getting into the cycle of debt again.
Shop around for the best personal loan
The great thing about pre-approvals, including the ones provided by Discover, is that you can shop around for personal loans without hurting your credit score. Take advantage of these offers so that you have a wide variety of loan options to choose from.
Different lenders cater to different types of borrowers, whether it’s based on the type of loan or the type of credit history you have. Plus, each one uses different approval requirements.
Just because you get one offer from a particular lender doesn’t mean that is the only loan offer you’ll ever receive. It doesn’t even mean that’s the best loan offer you’ll get. Be smart and shop around.
Even on a time crunch, you can get several loan offers within minutes of each other. Those spare moments are definitely worth the extra effort, especially when you consider how much a fraction of an interest rate can save you over the life of a loan.