2023 Discover Personal Loan Review
Discover doesn’t just offer credit cards and banking services — this financial corporation also offers personal loans ranging from $2,500 to $40,000. Here’s a quick look at some of Discover’s highlights:
- No origination fees: Unlike some other competitors, those who qualify for a Discover personal loan can skip paying an origination fee. These types of fees come out of your loan balance, so borrowers that are charged an origination fee won’t receive the full amount of funds they applied for.
- Quick funding turnaround: Discover borrowers typically find out whether they are approved for a loan on the same day they submit their application. They may receive funds within one business day.
- Competitive interest rates: With interest rates ranging from 6.99% to 24.99%, Discover has some of the most competitive rates on the market. Keep in mind that the lowest rates will go to consumers with excellent credit scores and robust credit profiles.
- Low-credit consumers may not qualify: To qualify for a personal loan with Discover, you’ll need to have a solid credit score and history. Bad-credit borrowers may not qualify.
- Low maximum borrowing amount: Compared to some other personal loan lenders on the market, Discover’s maximum borrowing amount is relatively low. While consumers can only apply for up to $40,000, other lenders that cater to borrowers with high credit scores offer up to $100,000.
- Best for borrowers with good to excellent credit: If you want a shot at qualifying for a personal loan through Discover, you’ll likely need an impressive credit profile and a high credit score. Those with excellent credit scores may be offered Discover’s lowest rates.
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Discover pros and cons
Discover offers a lot of competition when it comes to interest rates and other perks, but it’s not without a few downsides to consider.
No origination fees
Competitive interest rates (6.99% to 24.99%)
Flexible loan terms (36 to 84 months)
Low income requirement
Low maximum borrowing amount ($40,000)
Doesn’t allow for co-applicants
Low-credit borrowers may not qualify
Charges late fee of $39
Discover doesn’t charge an origination fee for its personal loans, which is good news for borrowers looking to pay as little in fees as possible. Low interest rates and loan repayment terms ranging from 36 to 84 months also make this lender a strong competitor. Aside from that, consumers only need a minimum income of $25,000 to qualify for a Discover loan.
On the other hand, if you’re looking for a large loan, you may want to look elsewhere as Discover only provides personal loans up to $40,000. Also, while Discover doesn’t charge origination fees, it still may charge you a $39 if payment is not received in full by the due date. Consumers with low credit may find themselves unable to qualify for a Discover loan, especially in light of the fact that this lender doesn’t allow for co-applicants.
In addition to being at least 18 years old, you’ll need to meet the following qualifications in order to be considered for a Discover personal loan:
|Minimum credit score||660|
|Debt-to-income ratio||Not specified|
|Residency requirements||Must be a U.S. citizen or permanent resident|
If you meet the basic requirements listed above, you may need to disclose how you plan to use your personal loan. While Discover does allow borrowers to use its funding for a variety of purposes, there are certain expenses you cannot put the money toward.
|Discover loans CAN be used for…||Discover loans CANNOT be used for…|
Home remodel projects
Post-secondary education expenses
Paying off secured loans
Paying off a Discover credit card
If Discover’s loan options won’t work for your borrowing needs, be sure to shop around for a lender that can help you meet your financial goals and can offer you the best-fitting rates, terms and amounts.
Best personal loan options for:
How to get a loan with Discover
Applying for a Discover personal loan is an easy, short and straightforward process, but it doesn’t hurt to prepare ahead of time. Here’s what you can expect during the application process:
Prequalify for a loan
You can prequalify for a personal loan with Discover, meaning you can check your rates without impacting your credit score. To do this, you’ll need to fill out an application and indicate how much you’d like to borrow, the purpose of your loan and the loan repayment terms. Once you submit that information, you can find out whether you prequalify and can then choose your loan details, such as repayment terms and monthly payment amounts.
Verify your information
If you prequalify for a Discover loan and wish to move forward, you’ll have to fill out a formal application and provide documentation to verify your information, such as pay stubs, W-2s and a government-issued identification. Discover will then perform a hard-credit pull, which can temporarily cause your credit score to go down by a few points.
Sign your loan agreement
After your hard credit pull, Discover will let you know whether you’ve been officially approved for a loan. Once you sign your personal loan contract, you may receive your funds within one business day.
If you don’t have a good credit score and a strong credit profile, it may be challenging to get approved for a personal loan through Discover. If you find yourself in this situation, consider improving your odds of getting approved by working on your credit score and practicing financially healthy habits.
How Discover compares to other personal loan companies
Even if you believe Discover aligns with what you’re looking for in a personal loan, it never hurts to shop around and compare other lenders. Here’s how Discover stacks up against similar personal loan lenders.
|Minimum credit score||660||620||680|
|APRs||6.99% to 24.99%||7.99% to 35.99%||8.99% to 23.43%|
|Loan Amount||$2,500 to $40,000||$2,000 to $36,500||$5,000 to $100,000|
|Repayment term||36 to 84 months||24 to 72 months||24 to 84 months|
|Origination fee||No origination fee||0.00% - 8.00%||No origination fee|
|Funding timeline||Receive funds as soon as one business day||Receive funds as soon as one business day||Receive funds same business day as approval|
|Bottom Line||While Discover doesn’t charge an origination fee, it’s not totally fee-free like other competitors that also target good-credit borrowers. Discover also may not work for consumers looking for large loan amounts.||Unlike Discover, LendingPoint may charge you an origination fee. However, LendingPoint may be a better fit for those with lower credit scores and its credit score requirement is just 580.||SoFi Bank does not require an origination fee on their personal loans. This lender may be a good fit for excellent-credit borrowers looking for large loans and flexible loan terms.|
How we rated Discover
To come up with our star rating for personal loan companies, LendingTree considered 22 data points across three categories:
- Accessibility: We paid attention to whether lenders offered loans to nontraditional borrowers, as well as those without excellent credit scores. We also checked if lenders offered soft-credit pulls, and whether they were transparent about eligibility criteria other than credit scores.
- Rates and terms: We wanted to know if lender rates, terms, amounts and fees were not only transparent, but competitive.
- Repayment experience: We based this category on lenders’ reputations, customer support availability and unique benefits.
The data points reflect every step of the process to shop and apply for, borrow and repay personal loans. A five-star lender, for instance, has flexible eligibility requirements, offers you the chance to prequalify without commitment and supports you in zeroing your balance.
The 22 data points, culled from the lenders themselves, determine the overall rating. We score lenders consistently, sometimes awarding partial points, so that you can make apples-to-apples comparisons when shopping around.
LendingTree isn’t paid for conducting these reviews, and lenders don’t have control over their content. With our reviews and ratings, we aim to give our users the objective and exhaustive information they need to make the best possible decisions.
Frequently asked questions
After submitting your information and documentation to Discover, you may find out whether you’re approved that same day. If you’re approved, you may receive your personal loan within one business day.
During the application process, you will need to provide proof of income to Discover. This lender requires that you have an income of at least $25,000. You may need to submit pay stubs or W-2s for your loan application to be considered.
Like most lenders, Discover provides fixed interest rates on their personal loans. What this means for borrowers is that, unlike credit cards or lines of credit, your interest rates are locked in and will not change throughout the life of the loan.