Discover Personal Loans Review

Advertiser Disclosure

Discover offers personal loans up to $35,000 and the flexibility to choose your repayment term, but those with good credit will be able to find lower rates elsewhere.

Discover offers personal loans ranging from $2,500 to $35,000, and interest rates from 6.99% to 24.99%. You get to choose your loan term, which can be anywhere between three to seven years. There are no fees as long as you pay on time, and you won’t be charged extra if you pay back your loan early. If you’d like, Discover will even send the money to your creditors directly. There’s also a 30-day money-back guarantee, which enables you to avoid interest charges if you pay back your money within 30 days.

Though there are few stringent requirements to apply, those with credit scores below 660 won’t be able to secure a loan through Discover. If you fall into this category, you may want to check out another personal loan lender, like OneMain Financial, that doesn’t have a credit score requirement. On the other side of the spectrum, those with excellent credit will likely be able to find a better deal elsewhere. Some personal loan providers offer rates as low as 3% APR to those with good credit, which could save you a significant amount of money over the life of your loan.

The Specs

Interest Rates6.99% - 24.99%
Loan Terms3 - 7 years
RequirementsU.S. citizen or permanent resident
Must be at least 18 years-old
Minimum annual household income of $25,000
Credit score of 660 or above
Best ForThose who want flexible repayment terms
Not ForThose who need money the same day
Standout FeaturesNo fees as long as you pay on time
Flexible loan terms
Pay your creditors directly
30-day money-back guarantee

The Claim

Discover helps bring your goals within reach, offering personal loans up to $35,000 to help you consolidate debt, make a major purchase, or even take a vacation. There are no fees as long as you pay on time, and you can choose how long your repayment term is, up to seven years. Should you run into financial trouble down the road, Discover will work with you to come up with a solution that’s mutually beneficial.

Is it True?

Yes. Discover offers personal loans ranging from $2,500 to $35,000. To qualify, you must be a U.S. citizen, at least 18 years-old, and have an annual household income of at least $25,000 or more. You must also have a credit score over 660. The majority of borrowers should have no problem meeting these requirements, but those with poor credit may have to explore some other options, like OneMain Financial, which doesn’t have a minimum credit score required to apply.

Discover’s interest rates are reasonable compared to its competitors. Borrowers with credit below 600 could end up paying up to 24.99% in interest. While that seems like a lot, it’s still a better deal than the 36% interest rates charged by some of Discover’s competitors, or the 300% APR most payday loans charge. If your credit is good, Discover may offer you rates as low as 6.99% on a personal loan. This isn’t bad, but you may be able to find better rates through a bank or another personal loan provider if your credit is that good, so you should shop around before committing to any lender.

Unlike most personal loan providers, Discover doesn’t charge any origination fees or closing costs. There are no prepayment fees either, so if you decide to pay the loan back early, you can do so without being charged extra. The only time you’ll incur extra charges is if you make a late payment and Discover offers you a way out of this as well. You can sign up for automatic payments so you don’t have to worry about forgetting.

Discover gives you the flexibility to choose your loan term, anywhere from three to seven years. Most personal loan providers cap loan terms at five years, and many don’t allow you to choose how long you need to pay it back. The company also offers a unique 30-day money-back guarantee, which charges no interest for customers who pay back the full value of their loan within a month.

Our Deep Dive

  • Borrow up to $35,000: Discover allows you to borrow between $2,500 and $35,000. Though a few lenders offer higher limits, Discover should be able to accommodate the majority of borrowers looking for a personal loan.
  • Reasonable interest rates: Discover’s 24.99% maximum APR is pretty affordable compared to what its competitors charge. Even its 6.99% minimum APR is a good deal compared to most personal loan providers, though you may be able to secure a lower rate through a bank or credit union if you have an excellent credit score.
  • Flexible loan terms: You can choose a loan term as short as three years, or as long as seven years. There are no prepayment fees, so you can always pay the loan off faster if you can afford to do so. Many personal loan lenders don’t allow their customers to choose the length of their repayment period, and even fewer give customers the option of a seven-year term. Though it’ll cost you quite a bit in interest, this is a nice option to have if you’re borrowing a large sum.
  • No fees as long as you pay on time: You don’t have to worry about unexpected costs arising down the road. There are no origination or prepayment fees, and interest rates are fixed, so your payments won’t go up over time.
  • No same-day deposits: Once you’ve filled out your application, you’ll receive your funds the next business day. It could take longer, though, if your application contains errors or missing information, so double check your application before submitting it.
  • Pay creditors directly: Discover can send funds directly to your creditors, if you prefer. This is a nice option to have when time is of the essence and you don’t want to wait for the funds to first be deposited in your account.
  • Money-back guarantee: If you return the funds you borrowed within 30 days, Discover won’t charge you any interest. It’s unlikely that you’d want to switch lenders so quickly after taking out a loan, but it’s nice to know Discover gives you that option, just in case.
  • Sign up for auto-payments: Discover enables you to sign up for automatic payments, so you don’t have to worry about forgetting to pay.
  • Financial education resources: Discover has a wealth of online articles covering personal loans, debt consolidation, and how to finance a major life event. It also offers calculators to help you determine how much your monthly payment will be and whether a debt consolidation loan is a smart move for you.

Cost Rundown

Though you can estimate how much your monthly payment will be, there’s no way of knowing what you’ll actually pay until you apply. Discover considers several factors in determining your interest rates, including your credit score, household income, and financial history. Payments will also vary depending on how much money you’re borrowing.

If your credit is good, you can expect interest rates below 10%, but if you have average credit, you could pay as much as 24.99% APR. That’s not a bad deal when compared to payday lenders and even some other online personal loan providers, but it may be possible to secure a lower rate through a bank or credit union, particularly if your credit is good.

Cheaper (or Free!) Alternatives

To make sure you’re getting the best possible rate, you should shop around before committing to any loan. Apply through your bank first, and then compare how Discover and other personal loan lenders stack up that quote. Don’t just look at the monthly payment. Be on the lookout for hidden fees and calculate how much you’ll end up paying over the lifetime of the loan. Make sure you’re getting a fixed-rate loan, too. If you choose one with a variable interest rate, your payments could end up becoming more expensive over time.

That may sound like a lot of work, but the amount you could save makes it worth the time investment. Say you borrow $10,000 at a 15% interest rate. Over the course of a five-year term, that loan will cost you $14,273.96. That same loan with a 16% interest rate will cost an extra $316.87. And depending on how much you borrow, your interest rates and your loan term, you could end up paying even more. The only way to avoid paying out hundreds of dollars in unnecessary interest is to do your research before committing to a loan.

The Competition

Prosper: Offering loans up to $35,000, Prosper also doesn’t charge you anything for paying off your loan early. There is an origination fee and repayment terms are three- to five-years, although Prosper chooses the exact length of time for you. You don’t get to decide. A minimum credit score of 640 is required for approval, and depending on your creditworthiness, your interest rate could fall anywhere between 3% and 36%. This makes Prosper a good choice for those with excellent credit, but those with poor credit may be able to find a lower rate elsewhere.

OneMain Financial: A popular personal loan lender, OneMain offers loans up to $10,000. There’s no minimum credit score to apply, so it’s a good choice for those who are having trouble getting a loan elsewhere. Interest rates vary from 25% to 36%, which isn’t uncommon for personal loan providers, though it runs on the expensive side for borrowers with good credit.

Lending Club: Another peer-to-peer lender that offers loans up to $40,000, Lending Club’s interest rates are similar to Discover’s; although, individuals with poor credit may end up paying as much as 30.99% APR. If you have excellent credit, you may be able to score a rate as low as 5.32% APR. Lending Club requires a minimum FICO score of 660, which could put it out of reach of some borrowers.

Wells Fargo: A good choice if you need a larger loan, Wells Fargo allows you to borrow anywhere from $3,000 to $100,000. There are no origination or prepayment fees. You can often get funds the same day, which is one advantage it holds over Discover. If you have a checking account through Wells Fargo, you may be eligible for discounts too, which can help bring down the cost of your monthly payments.

The Bottom Line

Discover offers flexible loan terms and reasonable interest rates, but it isn’t open to all borrowers. If your credit is under 660, you may have to consider other options, like OneMain Financial. If your credit score is excellent, you may be able to secure a lower rate elsewhere.