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Discover personal loan review

This provider has a generous 30-day return policy, but watch out for steep late fees.

finder.com’s rating: 4.0 / 5.0

★★★★★

Bottom line: Discover makes debt consolidation easy by sending the funds to your creditors and offers a 30-day guarantee for indecisive borrowers. But you might be surprised with a late fee — there’s no grace period. Read our full review or get our 30-second take.

Details

Min. Loan Amount$2,500
Max. Loan Amount$35,000
APR6.99% to 24.99%
Interest Rate TypeFixed
Min. Credit ScoreVaries
Late Fee$39
Loan Term3 to 7 years

Pros

  • No origination or prepayment fees
  • 30-day money back guarantee
  • Sends debt consolidation funds directly to creditors
  • US-based customer support
  • Check your rate without affecting your credit

Cons

  • Steep late fee with no grace period
  • Can’t use loan for education expenses
  • No autopay discount
  • Poor customer reviews
  • No joint applications

Our take on Discover personal loans

Discover Bank personal loans is a great loan for debt consolidation — if you’re looking to consolidate less than $35,000 in debt. It will send funds directly to your creditors, and you only have to use 70% for debt consolidation — the other 30% can be used to cover other expenses. It’s one of the few lenders I’ve reviewed that offers a 30-day money back guarantee if you decide you don’t need your loan.

However, it doesn’t come with a rate discount for autopay like many other lenders out there. It’s also not forgiving if you’re late on a payment — there’s no grace period and it charges a $39 late fee. And you can’t use the loan for education expenses, though Discover offers student loans separately.

Average rates, long terms and few fees

Discover personal loan rates range from 6.99% to 24.99% APR. The starting APR is a little higher than many other personal loans I've reviewed — but it's not the highest out there. The highest APR is slightly lower than average, though it's possible to find a lower maximum rate.

Loan terms are longer than average, running from 36 to 84 months. A longer loan term lowers your monthly payments, but increases the total cost of the loan. If possible, try to go for a shorter term.

There's no origination fee or prepayment penalty. The only fee you might pay is a $39 late fee, which it charges as soon as you miss a payment.

Use our calculator to get an estimate of how much you might pay based on your loan amount, term and Discover’s APR range.

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How Discover compares to other lenders

Compare Discover’s costs, loan amounts and requirements to two other online lenders: SoFi and Marcus by Goldman Sachs.

SoFi offers personal loans with some of the lowest rates out there, absolutely no fees and borrowers perks like access to free financial advice and career coaching. It also offers joint applications, unlike Discover. But its eligibility requirements are more difficult to meet than Discover's.

Marcus by Goldman Sachs offers personal loans with rates and fees that are similar to Discover's — though there are no late fees. And like Discover, Marcus doesn't accept joint applications. In fact, both products are so similar that it could be worth prequalifying with both before you decide. Checking your rate with both providers won't affect your credit score.

6 features that set Discover apart

These defining features are what make Discover stand out from the crowd for better and for worse.

Flexible return policy

Discover is one of the few lenders to offer a 30-day return policy for nonconsolidation expenses, like home repairs. During that time period you can return the loan without charge, and it should not affect your credit score aside from the hard credit check upon fully applying. This makes it a good option for situations where you want to have access to funds but aren’t absolutely sure you need it.

Direct payment to creditors

Discover makes debt consolidation easier by disbursing your loan directly to your creditors, rather than giving it to you to then pass along. In fact, Discover requires you to send at least 70% of the funds to your creditors if you sign up for debt consolidation.

But this can have a downside. While you can use a Discover personal loan to pay off a Discover credit card, banking regulations prohibit the company from paying off a Discover account directly. Instead, it deposits the loan into your checking or savings account.

This means you need to include credit cards from other companies if you want to apply for a Discover debt consolidation loan.

US-based customer support

Discover's customer service team is entirely based in the US. This means there's a good chance that you'll be speaking with someone in your time zone.

And despite being limited to a US-based team, live support is available for more hours than I've seen with most lenders.

  • You can speak to a representative between 8 a.m. to 11 p.m. ET on Monday to Friday
  • Support is available from 9 a.m. to 6 p.m. ET on Saturday and Sunday.

By contrast, many lenders I've reviewed only offer live support for a few hours outside of business hours on weekdays, and fewer hours over the weekend.

No autopay discount

Most personal loan providers offer a discount of 0.25% on your interest rate when you sign up for automatic payments. But Discover doesn't offer any discount for autopay.

This doesn't mean that Discover's rates aren't competitive — most lenders advertise interest rates after the autopay discount. And there's another reason to sign up for autopay: It helps you avoid late fees.

High, inflexible late fees

While there are no fees when you apply or repay a Discover personal loan early, its late fees are higher than average and uniquely inflexible. If you miss a payment, Discover charges a steep $39 late fee, with no grace period.

Most of the lenders I've reviewed charge a late fee of around $15. And that's only after your payment is 10 to 15 days past due.

No cosigners or joint applicants

Discover doesn't accept cosigners or joint applicants on its personal loan application. It's hard to find lender that allows you to bring on a cosigner when you apply for a personal loan — someone who stands in for you when you don't meet a lender's minimum requirements. But most allow you to apply with another person to share the cost.

However, you're not completely out of luck if your spouse is the breadwinner. Discover considers your household income when you apply for a loan, even though you're solely responsible for repayments.

3 main eligibility requirements

To qualify for a Discover personal loan, you must meet these requirements:

  1. Household income of at least $25,000
  2. US citizen or permanent resident
  3. At least 18 years old

Discover doesn't advertise a minimum credit score, but you likely need to have a credit score of at least 670 to qualify. That's what lenders consider to be good credit.

Discover gets mostly negative reviews

BBB accreditedYes
BBB ratingA+
BBB customer reviews1.37 out of 5 stars, based on 131 customer reviews
BBB customer complaints981
J.D. Power rankingRanked No. 3 in J.D. Power 2020 customer satisfaction survey
Trustpilot score1.9 out of 5 stars, based on 71 customer reviews
Customer reviews verified as of16 October 2020

Discover Bank has a mixed track record when it comes customer reviews. While the majority of Discover’s reviews on sites like the Better Business Bureau and Trustpilot are for its credit cards, the general consensus is that the company has poor customer service. The few comments on its personal loans are also negative.

Customers have also filed 122 complaints against Discover with the Consumer Financial Protection Bureau (CFPB) since 2011, mainly over unexpected fees. A few customers also reported trouble making payments or difficulty getting a loan.

But it's not all bad. Discover came in second place in the 2020 J.D. Power Consumer Lending Customer Satisfaction Survey. The survey asked borrowers about their experiences with the application and approval process, loan management, as well as the rates and terms of the loan.

How the application works

You can apply for a Discover personal loan by phone, mail or through its website. If you apply on the website, the application process only takes a few minutes.

Discover verifies income for its personal loans by asking for documents like pay stubs and bank statements. It also might use your work email address to reach out to your employer to confirm your employment status.

If you make $25,000 a year on your own, you only need to verify your own income. But if you’re unemployed or make less than the minimum income, you’ll need to verify income for additional members of your household.

If approved, you may be able to receive your loan funds as soon as the next business day. However, it’s not guaranteed. If there are any errors on your application, your loan is approved on a weekend or you don’t want your funds deposited into your bank account, it could take up to seven days for your loan to be disbursed.

How to return a Discover personal loan at no cost

To qualify for your money back within 30 days, you must mail your request in writing along with a check for your loan balance to the following address:

Discover Personal Loans
PO Box 30954
Salt Lake City
UT 84130-0954

Discover must receive the check within 30 days of disbursing the funds. And funds that are disbursed directly to creditors for debt consolidation are ineligible for this offer.

Discover personal loans are legit

While you might know Discover Bank for its credit cards, it's also a legitimate personal loan provider. Discover member of the FDIC and offers several other products, including home loans, student loans and online banking.

Its privacy policy is easy to follow — though it automatically shares your information with its marketing partners. You can limit information sharing by calling customer service at 877-256-2632.

To see how Discover stacks up to the competition, read our guide to personal loans. Or if you’re looking for a different type of loan, Discover has other options available.

Personal loan ratings

★★★★★ Excellent
★★★★★ Good
★★★★★ Average
★★★★★ Subpar
★★★★★ Poor

We analyze top personal loan providers and rate them one to five stars based on factors that are most important to you. These factors include: rates and fees, customer reviews, loan amounts, loan processing and borrower experience.

Read the full methodology of how we rate personal loan providers.

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