Discover is best known for credit cards, but it also offers personal loans that can be useful for major purchases or debt consolidation. Discover lends to borrowers with good to excellent credit and provides a straightforward online application process. This review covers who qualifies, loan sizes and terms, rates and fees, how debt consolidation works, and whether Discover might be the right choice.
Who qualifies for a Discover personal loan
Discover primarily lends to applicants with solid credit histories. While there is no publicly stated minimum credit score, applicants will likely struggle to be approved with a FICO score below 660. Approval is not based on score alone. Discover evaluates:
- Recent payment history
- Debt-to-income ratio
- Overall financial profile and other factors from the applicant’s credit history
Loan amounts and terms
Discover personal loans are available in the following ranges:
- Loan amounts: $2,500 to $40,000
- Repayment terms: 36 to 84 months (3 to 7 years)
Longer terms lower monthly payments but increase total interest paid. Borrowers can shorten the effective term by making extra principal payments without penalty, which is especially impactful in the first year of the loan.
APR and interest rates
Discover’s APRs generally range from 7.99% to 24.99%. The lowest rates are reserved for applicants with the strongest credit profiles. An APR near 8% is competitive in the industry, but only the best-qualified borrowers will see rates that low.
Fees to know
- Origination fee: None. Discover does not charge an origination fee on personal loans.
- Late fee: $39. This is relatively high and can significantly increase the cost of borrowing if payments are frequently late.
Discover will charge a $39 late fee if a payment is missed or late.
Using a Discover loan for debt consolidation
Discover makes debt consolidation convenient by offering to send loan proceeds directly to other creditors on the borrower’s behalf. This can simplify payoff logistics and reduce the temptation to keep old accounts open with balances.
Important exclusion: Discover will not allow loan proceeds to be used to pay off existing Discover credit card balances.
Pros and cons
Pros
- Competitive low-end APRs for top-tier applicants
- No origination fee
- Direct payment option for debt consolidation
- Simple online application and potential same-day decisions
- Loan amounts and terms that suit many needs
Cons
- Requires good to excellent credit to have a strong chance of approval
- $39 late fee is relatively high
- Cannot be used to consolidate Discover credit card balances
- Funding can take up to two weeks in some cases
Should a borrower choose Discover?
Discover can be a strong option for borrowers who qualify with good or excellent credit and who appreciate the convenience of direct payoff for consolidation. Its competitive starting APRs and lack of origination fee make it worth considering. However, the $39 late fee and the restriction against paying off Discover credit card balances are important downsides to weigh.
Even if Discover provides a compelling offer, borrowers should shop around. Different lenders use different underwriting algorithms, and another lender may offer a better rate or more favorable terms for the same borrower.
How to shop for the best personal loan
Applying with multiple lenders can help borrowers compare prequalified offers and pick the best APR and terms. Using services that perform soft credit checks can show potential rates from many lenders without harming the borrower’s credit score. Reviewing several prequalified offers side-by-side makes it easier to select the most cost-effective loan.
Final recommendation
Discover personal loans are a solid choice for creditworthy borrowers who need $2,500 to $40,000 and want a predictable repayment plan with no origination fee. They are especially useful when consolidating other creditors because Discover can pay those balances directly. Borrowers should confirm their likely rate, account for the $39 late fee risk, and compare offers from multiple lenders before accepting any loan.
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