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Discover Personal Loans Review

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Date Established
1985
Location
Riverwoods, IL

Pros

  • Suited for small businesses and startups
  • No origination fee
  • No closing costs
  • No prepayment penalty
  • Time to funding: 2-7 days

Cons

  • Stringent credit score requirements
  • Stringent borrower qualifications
  • High interest rates

Overview

Founded in 1985 as a subsidiary of Sears, Discover Financial Services is best known to the public as the issuer of the Discover card, one of the “big four” credit card brands alongside Visa, MasterCard, and American Express. In addition to their credit card services, Discover offers personal loans to borrowers with good credit and a robust financial history.

Discover deals in unsecured installment loans. The borrower is sent the full loan immediately upon approval, then pays down the principal, plus interest, on a fixed monthly schedule.

These loans are marketed as a means by which consumers can pay down their debt, as Discover can send funds directly to your creditors on your behalf. (The company also offers free debt management tools.) However, Discover’s personal loans can be used for a variety of purposes: vacations, weddings, and, for the purposes of this article, funding a start-up business.

Read on to find out if Discover Personal Loans are a good fit for you.

Services Offered

Discover Personal Loans offers personal loans that can be used for funding a start-up business, among other things.

Borrower Qualifications

The requirements for getting a Discover personal loan are as follows:

Time in business:N/A
Credit score:At least 660
Business revenue:N/A

To be eligible for a Discover personal loan, you must be 18 years of age or older, a U.S. citizen or permanent resident, and have a minimum household income of $25,000. It should be noted, however, that most approved borrowers make more than $25K. And while a credit score of at least 660 is required for approval, AAACreditGuide reports that borrowers, on average, have a credit score of 750.

Whether you get approved for a personal loan is entirely down to Discover’s assessment of your personal creditworthiness. The details of your business (revenue, time in business, etc.) do not come into play.

One benefit of Discover Personal Loans is that they offer loans to people in all 50 U.S. states. Many other online lenders cannot say the same.

Terms & Fees

These are the terms and fees for Discover Personal Loans:

Borrowing amount:$2.5K – $35K
Term length:3 – 7 years
Interest rate:6.99% – 24.99%
Origination fee:None
APR range:6.99% – 24.99% (fixed)
Collateral:None
Compare to other personal loan lenders:
LenderBorrowing AmountTermInterest RateMin. Credit ScoreNext Steps

$2K - $25K2 - 4 years15.49% to 30%600Apply Now

$1K - $50K3 or 5 years8.16% – 27.99%620Apply Now

$2K - $35K3 or 5 years6.95% - 35.99% APR640Apply Now

lending club logo

$1K - $40K3 or 5 years5.32% - 30.99%640Compare

Discover’s unsecured installment loans have term lengths from three to seven years. These are relatively flexible repayment terms—other online lenders typically offer term lengths of up to five years only. And with Discover, you choose your term length; they don’t choose it for you.

On the subject of APRs, Discover states:

APRs for Discover Personal Loans are determined on an individual basis. They are systematically determined using information provided by you and on your credit bureau report.

Discover does not charge any origination fees or closing costs. Neither do they charge prepayment fees. Should you decide to pay your loan back early, you’re free to do so, and you won’t be penalized for it. Imagine that!

The only fees you’ll have to worry about are late payment fees. Discover states that, in the event you don’t make a monthly payment in full by the due date, they “may” charge a late fee of $39. Discover gives you the option of setting up automatic payments if you don’t want to worry about this possibility.

What’s more, if you take out a loan and suddenly think “Oh God, what have I done?“, you can repay the loan in full within 30 days, you won’t be charged any interest, and you can go about your life as if nothing ever happened.

In summary, if you can get approved for a Discover loan, it’s not a bad deal at all.

Application Process

The application process for Discover Personal Loans is conducted online. To apply for a loan, go to the Discover Personal Loans homepage and enter your desired loan amount, the purpose of your loan, and your credit score range. You’ll then get a rough estimate of your monthly payments depending on the term of your loan, along with an APR slider so you can see payment estimates based on different APRs.

discover personal loans

If you like what you see, you can formally apply for the loan by entering your personal and financial information. Discover will then perform a hard credit check (which will have a slight effect on your credit score). Assuming you filled out the application correctly, you should find out if you qualify that same day. If you do, you’ll receive a call from a loan specialist to verify your identity and finalize the offer.

Once you’ve signed the loan agreement, you should receive the funds in your bank account the next business day.

Sales & Advertising Transparency

The Discover Personal Loans website contains a good deal of information about their loan products and their application process. There’s an extensive FAQ, as well as a number of articles about consolidating debt, financing life events, and the like. There’s live chat, and there’s also a phone number you can call for assistance. I found them to be prompt, transparent and helpful.

Customer Service & Technical Support

Customer service is available via phone 8am – 11pm ET, Monday through Friday, and 9am – 6pm ET on Saturday and Sunday.

Somewhat anachronistically, there is no option to receive email support. Plenty of information is available via the FAQ, though, so you may well not need direct support.

Negative Reviews & Complaints

Professional reviewers don’t have many qualms about Discover Personal Loans. In fact, they generally give the service quite high marks. However, in reviewing customer comments on the company’s Better Business Bureau profile, Trustpilot page, and Credit Karma page, I have found a number of customer complaints regarding Discover’s loan practices. I’ll detail a few of them:

  • Customer Service: A few people report getting the run-around by customer service, with different parts of the company being unaware of what the others were doing.
  • High Interest Rates: Some borrowers complained that the interest rate they were ultimately offered was significantly higher than what they were led to believe it would be by Discover’s promotional materials.
  • Payments Not Posting: Others have reported problems with their payments not being posted after they tried submitting them online.

Positive Reviews & Testimonials

Most professional reviewers and many customers have found Discover Personal Loans worthy of praise. Aspects of the service that have received the most compliments include:

  • Simple, quick application process
  • Rapid approval process
  • No origination/prepayment/closing fees
  • Competitive rates
  • A great loan choice for people with good credit

Reviewers have given Discover particular plaudits for its debt consolidation services.

If you’ve had experiences with Discover Personal Loans, good or bad, let us know in the comments—we’d love to hear from you!

Final Verdict

Considering the near-total lack of user fees, competitive rates, and the quick and relatively painless application and approval processes, borrowers with good credit would do well to consider Discover Personal Loans as a source of funding for their business start-up. For a large company, its lending and customer service practices are quite sound, and you won’t be nickel-and-dimed to death with needless fees. I just wish Discover offered email support.

Be sure to comparison shop when searching for a personal loan, though. Like Discover, many other lenders give you pre-qualification estimates which can be obtained without affecting your credit score. Do your due diligence to see which lender will offer you the best rates and terms.

Compare to other personal loan lenders:
LenderBorrowing AmountTermInterest RateMin. Credit ScoreNext Steps

$2K - $25K2 - 4 years15.49% to 30%600Apply Now

$1K - $50K3 or 5 years8.16% – 27.99%620Apply Now

$2K - $35K3 or 5 years6.95% - 35.99% APR640Apply Now

lending club logo

$1K - $40K3 or 5 years5.32% - 30.99%640Compare
Jason Vissers

Jason Vissers

Jason Vissers is a writer and cereal chef from San Diego. He graduated with a Political Science degree from San Diego State University in 2001. He's been writing about website builders, crowdfunding sites, online lenders, and credit cards for Merchant Maverick since 2015. Additionally, Jason can't eat raisins.
Jason Vissers
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