UPST anecdote + CA opportunity

Forgive this long winded post. I became an UPST customer today. I thought the journey was interesting enough that I should share it.

On 6/22/21 I “applied” for a 25k personal loan from upstart. I filled out a few online forms, and it took about 5 minutes, and they didn’t do a hard-pull of my credit score (I have credit monitoring and there was no hit). I wish I would have wrote down the rate, but I think it was 8% interest and 4% origination fee. The lender, I am pretty sure, was Cross River Bank.

I was a bit disappointed in the rate + fee. It was almost equal to my Wells Fargo unsecured credit line of 12%. Wells was historically very conservative on their rates (read that as they killed their customers) so I didn’t see this as a big win for UPST.

But I just figured UPST wasn’t focused on me as a customer because they were looking for those people who couldn’t get credit or those who are getting 20% interest rates, etc. So I moved on.

On 8/13/21, I received a “teaser”-type marketing email from upstart. First of all, I kind of liked that they followed up. It wasn’t a very frequent “spam” type message. The second thing was that they were now offering me 50k loan. So I clicked to check the rate, and now the rate was 5% interest and 4% origination fee.

I was intrigued by this. It was a nice improvement in rate and the loan size was double what they offered me previously. So I liked this option much more, but I was still struggling to pay in aggregate 9% for money.

Around this time, johnwayne posted that you could use a credit union partner of upstart, I don’t remember which one, and not have to pay the origination fee. So I went to that partner’s website to apply, and it asked me for my zip code, and it said I wasn’t in their serving area, and couldn’t proceed. So I was bummed about this. But it was at least a fast-fail, they told me right off the bat.

Then today, October 18, again about two months after the last message, I got a new email from UPST saying to check my rate. This time the rate was 6% and no origination fee. The loan was provided by Patelco, a credit union in Northern California.

A previous poster mentioned when Patelco was signed up (…) on August 25th. I remember reading that post and thinking, ‘ok, one more credit union’, no big deal. But now I realize the magnitude of this. Now 40 million Californians (as near as I can tell) can get Upstart loans without the origination fee! They are based in Northern California, whereas I live in Southern California. So I am guessing they can loan anywhere in the state?

I was astonished that from announcement on August 25th to October 18, Patelco had implemented a completely seamless integration with UPST.

I immediately took the loan. It took me 30 minutes from start to finish. Here was the process. I confirmed the loan on upstart’s page. From my perception, I never left “Upstart”. Next they authenticated my bank and identity. They did a hard credit pull (I got a notice from my credit monitoring). I was disappointed that I got an email saying Patelco was reviewing my application. I figured it might take a couple days after receiving that message which was a drag after hearing about all the instant approvals, etc.

Three minutes later the loan was approved. Then the website led me through a series of disclosure documents (all simple, and mostly one page). Next I had to DocuSign the Promissory Note and the credit union application. The promissory note was maybe 6 pages and the credit union application was one page. All really standard language. No poison pills like prepayment penalties. It was perhaps 4 signatures, all within DocuSign.

And BAM, it said my loan would fund today, and automatic payments would start next month.

In going through this experience, the implications kind of blew me away. First, the California market is now blown wide open to Upstart. This is a big market with a lot of affluent customers.

The second, I got unsecured credit at an extraordinarily good rate. For perspective, average mortgage rates in 2019 including origination fees were around 4.5%. This is for secured lending!

The third thing was just how effective UPST was at monetizing me. They only sent me 2 follow-up messages, and each one delivered interesting new value to me. Rather than being “spammed”, I felt like I was being served! What a difference from the other crap in my email!

The forth insight was just how rapid and seamless the process was. How rapidly Patelco came online. How brilliant the integration was.

Finally I thought about how much things could change as UPST expands their offerings. We all know about their auto expansion. But I saw the posts a bit back about them also hiring for Mortgages.

Applying for car loans and mortgages are an absolute disaster right now in my opinion. Recently I bought a car for a family member and the sales manager used the auto lending terms to wrangle me into an extended warranty I didn’t want.

I refinanced my mortgage in 2020. Anyone who has applied for a mortgage in the last 3 or 4 years knows how painful that is (I co-signed an apartment for my daughter and they wanted a check showing that we had paid each rent payment, 12 check copies). It took 2+ months from start to finish in that process. They had my tax returns, bank statements. I signed 4 letters of explanation about weird things on my credit report. They wanted a letter from my company about my bonus which was delayed being paid in 2020 due to covid. I’m a W2 employee with good credit! What a disaster…

If UPST gets momentum in these markets they are going to change lending as we know it. Others will have to follow their lead, or partner, or they are going to lose share. The consumer is the big winner as their rates are priced more accurately and the consumer is in the drivers seat, as opposed to the lender! Very excited about UPST.


Rob (long UPST ~30%)


Thank you for sharing that anecdote…stories like yours, and their implications, inspire me to consider taking a larger position (UPST has grown to 15% of my portfolio and is now the top position). I agree that auto lending is horrible. I, too, was talked into the extended warranty on my last vehicle purchase…in the moment of signing I wasn’t able to stand my ground amidst the highly practiced sales pitch but luckily I had 30 days to change my mind so I called the lender and had them remove the warranty from the loan. Let’s hope all that nonsense ends soon!