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Discover Auto Loan Review

Editorial Note: The content of this article is based on the author's opinions and recommendations alone. It may not have been reviewed, commissioned or otherwise endorsed by any of our network partners.

A Discover auto loan is really just a Discover personal loan — the financial services company doesn’t specifically offer auto loans, but you could use a Discover personal loan to buy a car.

How Discover loans work

Here are some important details on Discover personal loans:

  • APR range: 6.99% to 24.99%
  • Terms: 36 to 84 months
  • Loan amounts: $2,500 to $40,000

Discover is well-known as a credit card issuer, but you don’t have to have a Discover card to apply for a personal loan.

You’ll need to provide personal information and note how much you’d like to borrow and for how long. Most Discover personal loan applicants get a decision on the same day they apply. You could get your funds as early as the next business day.

If you apply, your final approval and terms on a personal loan will depend on many factors, including your credit score. Discover’s fixed interest rates mean you’d have the same monthly payment over the life of the loan.

A Discover personal loan as an auto loan

With a personal loan, the car doesn’t matter. Many banks won’t approve an auto loan if the car has a salvage title, is too old or has too many miles. Here, the car’s value doesn’t matter.

It could be good to use a personal loan to buy a car when you know the car you want to buy is dependable and relatively cheap. It could also be good if the amount you want to borrow for a car is too low to meet the minimum amount required to take out an auto loan.

It may not be good to use a personal loan to buy a car when you could get a lower auto loan interest rate. According to the Federal Reserve, the average interest rate on a 48-month car loan was 5.27% in the third quarter of 2019. Compare that with a 10.07% average interest rate on a 24-month personal loan in the same time period.

Pros and cons of Discover personal loans

Pros Cons
  • Few fees: There are no origination fees or prepayment penalties.
  • Next-day funding: Discover could make funding available as early as 1 business day after you’re approved.
  • Discover FICO tool: Get your Free Credit Scorecard, which includes your FICO credit score.
  • Customer support: Discover’s personal loans customer service is based in the U.S.
  • 30-day money-back guarantee: Within 30 days of being funded, you could return the entire loan amount without having to pay interest.
  • Option to change payment date: During the life of the loan, you can change your payment date twice.
  • High APRs: Personal loans tend to have much higher interest rates. Many lenders offer lower auto loan APRs.
  • Good credit needed: Discover personal loans depend heavily on your credit score.
  • No cosigner option: You can’t have a cosigner on a Discover personal loan.
  • $39 late fee: $39 if payment is not received in full by the due date, as well as any added interest.
  • Up to 7 days for disbursement: Next-day funding is possible, but it could take up to 7 days total.
  • Extra payment goes to the principal last: Any extra payment goes to unpaid late fees, interest and then the loan principal.

How to apply for a Discover personal loan

Visit DiscoverPersonalLoans.com to apply, or call 866-248-1255. Note that you can check your rate through a Discover prequalification without impacting your credit. Only after you accept and finalize your loan would it affect your credit score.

If you apply online, you’ll first be asked to provide:

  • The amount you want to borrow
  • The purpose of your loan
  • The loan term you’re seeking

You’ll then enter personal information, like your address, phone number and email. After that, Discover will ask for your employment information, including:

  • Employment type (full time, part time, self-employed or not employed)
  • Employer name
  • Occupation
  • Total annual income

It also asks about additional household income (which is optional) and your monthly housing payment. You must also enter your Social Security number, date of birth and citizenship status.

How to pay for a Discover personal loan

If you do take out a Discover personal loan, there are seven ways you could make payments.

  • Online: Visit the Discover personal loans login page to access your secure account.
  • Automatic payments: You can enroll in this at any point.
  • Automated phone call: Call 866-248-1255 and make a payment using the automated phone system.
  • Service center phone call: Call 866-248-1255, choose the menu option to speak with a representative and provide your payment details.
  • Mail. Mail a check to Discover Personal Loans, P.O. Box 30954, Salt Lake City, UT 84130.
  • Wire transfer: Set up a wire transfer to Discover.
  • Electronic bill pay: Set this up through your bank or credit union.

Discover personal loan vs. alternatives

It’s smart to apply to several lenders. If you don’t have the best credit, you have additional options for bad-credit auto loans. Also, keep in mind that a credit union could be a great option for an auto loan or personal loan.

Here are some alternative auto and personal loans options from which you can choose.

Auto loans: Navy Federal Credit Union

If you have ties to the U.S. military, you could look at joining Navy Federal Credit Union, which offers some of the lowest rates around.

  • APR: As low as 4.54%
  • Terms: 36 months to 96 months
  • Loan amounts: Minimum of $250, with no maximum

Auto loans: LightStream

If you’re looking for terms between 24 and 36 months or you need more than $35,000, a LightStream auto loan could be an option for you.

  • APR: 8.99% to 16.44% (with AutoPay)
  • Terms: 24 to 84 months*
  • Loan amounts: $5,000 to $100,000

(*Payment example: Monthly payments for a $10,000 loan at 3.99% APR with a term of 3 years would result in 36 monthly payments of $295.20.)

Personal loans: Achieve

The lowest possible APR for an Achieve personal loan is below what you can get from a Discover personal loan, but its maximum is much higher.

  • APR: 7.99% to 35.99%
  • Terms: 24 to 60 months
  • Loan amounts: $5,000 to $50,000

Personal loans: LendingClub

If the vehicle you’re interested in is more than $35,000 — but less than $40,000 — a LendingClub personal loan could be an option for you.

  • APR: 9.57% to 36.00%
  • Terms: 36 to 60 months
  • Loan amounts: $1,000 to $40,000

Is a Discover personal loan worth it to buy a car?

Discover personal loans look like a good option for when you need a personal loan, but maybe not when you need an auto loan.

Because it has a higher APR, it’s probably not worth it to buy a car with a Discover personal loan unless you need to buy a car that other lenders won’t approve of for an auto loan.

If other lenders aren’t willing, you might want to take a second look at the car to make sure it’s a sound choice for you.

 
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