Upstart Review: Advantages and Disadvantages to Consider for Taking a Loan

Upstart Review: Advantages and Disadvantages to Consider for Taking a Loan 24.07.2019Leave a comment

A business built on lending money at interest has been known to mankind for thousands of years.

For all past centuries, the attitude towards those who offer loans for a short period was rather dubious, if not said negative. It seemed to people that usurers were making money out of thin air, profiting from other people’s misfortunes.

At the same time, few people put themselves in the place of a lender who risked losing money in case of delay or fraud of a borrower. Hence, exorbitantly high-interest rates appeared that covered the risks of non-payment of loans.

Now, there is a turning point in the functioning of the issuance of loans. Working with them is becoming more technological than before. The introduction of artificial intelligence/machine learning (AI/ML) has had a significant impact.

These innovative solutions are already seriously optimizing the process of issuing a loan from the platform Upstart, and in the future will make it possible to predict financial risks almost without errors. The system of lending money has never been as convenient and well-designed as nowadays.

Steps 1-2-3
Steps 1-2-3

What is P2P Services?

Using P2P services to get a loan online is a fairly quick and interesting solution for those seeking funding. To understand the completeness of the whole picture, it is necessary to understand the basic concepts used in the modern financial market segment.

P2P is an abbreviation of the phrase “peer to peer”, used to designate the way users interact in computer networks – the exchange of information without dedicated server stations from user to user.

The system, in the same way, applies to finance. There are no allocated capital, observers, and intermediaries. A person applying for money gets finances directly from the owner.

At the same time, several negative elements of the standard approach to lending are avoided:

  • payment to intermediaries;
  • the dependence of the creditor on external circumstances;
  • monopolization of the financial market.

P2P lending is the financial service issuing loans, in which the creditor is not a bank or credit organization but a certain number of individuals.

On such platforms, investors and borrowers interact directly without an intermediary in the form of a bank to whom in former times for such mediation were given indecent high incomes with usually disgusting quality of the service itself.

Reliability of p2p crediting companies and the trust to them are expressed in dozens of billions of dollars that people invest and borrow through these platforms.

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More than 300 000 loans

P2P lending platforms respond to requests from both parties and satisfy their needs in one place. Small entrepreneurs or other kinds of borrowers come to the platform from one side and investors on the other.

The platform checks applications for a loan: refuses insolvent ones and admits to the platform borrowers that are considered to be reliable. Investors can access these bids and can provide loans to persons they want, earning 2–5 times more than they could earn on deposits in the bank.

Upstart Returns by Grade















This is person-to-person or peer-to-peer lending: borrowers and investors meet without intermediaries and help each other in meeting the needs on a single platform that creates all the conditions for successful interaction of the parties.

Main Conclusions about P2P:

  • lending money using this platform is a method of mutual crediting without intermediaries (investors directly lend to borrowers).
  • Such platforms are popular and in-demand all over the world; tens of billions of dollars have already been issued through such platforms around the globe. In the USA, such well-known companies as Upstart and Prosper issued $3.8 billion and $15 billion in loans, respectively.  
  • By providing loans through P2P lending platforms, private investors earn 2–5 times more than they could earn on deposits in a bank, and businessmen or individuals get loans without intermediaries. Amenities of open information, now, choosing a good company or service becomes easier. To take advantage of the loan offer through the P2P system, it is necessary to find an appropriate site where similar services are offered. Especially, if the borrower is young he is difficult to implement this idea. Fortunately, Upstart does not judge borrowers only by age, income level, and a place of work.

Why People Choose P2P Crediting?

P2P lending has gained popularity for several reasons:

  1. The convenience of service. To get a loan from a bank, one needs to choose a suitable department, come to it, usually even several times, provide a passport, as well as a second identity document, certificate of income or property, and hope that his/her application will be approved. In the case of the p2p platform, all actions are performed remotely. The list of requested documents is limited to an ID card.
  2. Time of receipt of money. The bank takes up to a week to approve the loan. On p2p platforms, the issue is sometimes resolved in minutes or one business day, depending on the amount of the loan. Automated algorithms in real-time calculate the borrower’s scoring (rating), determining the possibility of obtaining a loan, and the rate on it based on the level of risk.
  3. A high probability of actually receiving money. Banks select borrowers according to a variety of criteria that are often difficult to meet. Many of them are one-sided patterns, often dictated by regulators. After filling a huge amount of paperwork, the chances of a small business running into failure are greater than getting money.
  4. No mandatory criteria. For example, even with a damaged credit history, the borrower has a chance to get a loan. In the case of Upstart, this service goes far beyond the FICO data.
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Finally, interest rates on p2p platforms can be both lower and higher than in banks.

Even if the rates are higher, the borrower receives benefits in the form of high-quality service, ease of application, and a quick review period.

For these benefits, borrowers are often willing to pay a higher interest rate.

What is Upstart?

Upstart is a p2p website founded by two former top Google employees. Dave Girouard was formerly the President of Google Enterprise and Anna M. Counselman led Gmail’s consumer operations. This platform entered the lending market in May 2014 and issued $3.8 billion in its loans over five years.

Growing Upstart

The Upstart platform uses artificial intelligence (AI) and machine learning to evaluate credit parameters and automate its acquisition. To assess creditworthiness, the system studies non-traditional data of a potential borrower, such as employment history, education, and awareness of his credit rating. In this way, clients are evaluated that, according to standard banking criteria, seem risky, but can nevertheless prove to be beneficial to the lender.
Other Lenders
Credit Score
Length of credit history
Area of study
Job History

The platform is mainly used by college graduates aged 28-35, with an average credit card debt of $12,000. These clients do not have a full credit history, but the platform will be able to evaluate their creditworthiness even without additional documents.

It is a universal platform of P2P-lending, where a borrower can get a loan for anything: from study to business.

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Clients receive a loan in three simple steps:

  1. registration;
  2. choice of the loan term;
  3. setting the payment schedule.

The interest rate is fixed, from 4.68% to 35.99% per annum. It is calculated on the basis of the loan amount, the region of residence of the borrower, his profit, and social status.

Naturally, a 30-year-old temporarily unemployed engineer with higher education will have a completely different rate than his former classmate, who has never worked and lives on benefits and part-time jobs.

One has to admit that sometimes a young entrant may simply not have money to pay for his studies, but all his life he has been gaining medals and working on vacations.

The system sees this and understands that such a person will definitely return the debt, therefore it offers him a more favorable APR than to his lazy classmate.

The platform offers 3- and 5-year loans with a fixed interest rate, which are often used to pay off credit cards, make credit purchases or invest in professional education. Such investments are commonly effective.

Upstart Will Suit a Person Who:

  • is responsible. In addition to the official earnings, the platform assesses the level of education, employment, and income when approving loans;
  • is a young specialist who is just starting his professional career. The platform is ready to make concessions to post-graduates and students. The creators of Upstart understand that education  is a real power, so their underwriting system is set up so that responsible, but poor students have a big chance to get a loan;
  • is in straitened circumstances and needs fast money. As a rule, Upstart issues loans within a day after approval. For educational loans, one needs to wait up to 3 days.

NerdWallet recognized Upstart as the best lender for personal loans in 2019 in the category “Loans for customers with a bad credit history”.

This is a great opportunity for almost everyone to improve his/her financial health. According to Upstart, today, it favors 60% of loans without human intervention, with one of the lowest customer default rates on the market.

Percentage of automatic issuance of Upstart loans / Source: Upstart
Percentage of automatic issuance of Upstart loans / Source: Upstart

How Upstart Works

To start working with the platform one needs to register. There are registration forms for borrowers and investors. Registration takes about 3 minutes, followed by authorization via the email address.

The website interface is quite simple and clear: a small number of main sections, within each section, there are the company’s products, as well as a calculator that allows people to visually assess their capabilities and benefits.

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The section “Invest” is intended for people who are called investors (money lenders in other words), where they can check the information about current and already funded projects, statistics and receive access to the whole needed data.

Clicking on the “Borrow” button an applicant sees the full range of offered loans types. To submit a request he/she needs to fill an inquiry identifying the purpose of the borrowing, his/her personal data, school/university attended, area of study, occupation, and employer.


Advantages and Possible Risks for Borrowers and Investors at Upstart P2P Platform

Turning to the Upstart P2P platform for help, borrowers expect to get money quickly with the provision of a minimum number of documents. An intermediary company can provide this to customers. 

P2P investing is an up-to-date way to make money on free funds. Anyone can become an investor by investing the minimum allowable amount (for example, from $1,000), and signing an agreement with the Upstart company.

Borrowers Investors
The applications are processed quickly and decisions on them are made without delay.
Easy registration and login.
The interest rates on loans are set individually in each case which means that there are great chances for a person in need to get ones that are lower than in banks.
An independent choice of the borrower.
An applicant can get loans without leaving home.
There is a certain protection against the non-return of funds (all borrowers go through special algorithms and criteria before entering the portal).
The probability of failure is extremely small because of the innovative approach to emergency money issuing.
Theoretically, investors can earn on the issuance of loans much more than on deposits in banks. In practice, several successful investments can cancel one unsuccessfully issued loan.
There is a variety of options of online loans, i.e.: “refinance, use for education, make a purchase, pay for personal expenses, and other (an option for those who want to expand or start a business)
Investors can diversify deposits by investing little by little in different bids. Those who decide to finance can build their own strategy, based on the credit ratings of borrowers.
People save up to 23% compared to the credit card rates of banks they have.
Upstart accepts payments by check or one-time electronic payments. It is up to borrowers to opt for the repayment method.


Anyone can become a participant in p2p crediting – a legal entity or an individual. Before a client starts investing or applying for a loan, he/she must carefully read the terms of the license agreement and examine the proposed counterparty.

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P2P sites are interested in increasing credit transactions between investors and borrowers and do everything to encourage this process.

P2P websites are on the peak of popularity. They are improving constantly and try their best to offer increasingly favorable conditions of cooperation for money lenders and borrowers. Though a person should start working only with reliable platforms, proven, and do not chase for a high percentage of profitability.

People have to select services that create trusting transparent relationships and contribute to a reliable turnover of funds. One of such companies is Upstart which has proved its reliability and trustworthiness through the successfully issued and repaid loans amounts.

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Andrei Shilkov

Blog author. I am well versed in Finance and Digital Marketing. I have two bachelors degrees in Finance. Born in Russia, but later moved to the USA, to western Pennsylvania, the city of Pittsburgh. I have a Certified Public Finance Officer (CPFO) certificate. I also worked at IRS and Microsoft.

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