Social Finance (better known as SoFi) is our current recommend lender for personal loans, credit card refinancing loans, and student loan consolidation and refinancing. This is our review of SoFi personal loans (which can be used for any purpose, from major purchases to consolidating and refinancing credit card debt).
Click here if you are looking for our review of SoFi student consolidation and refinancing loans. Or click here to visit SoFi's student loan page.
SoFi is an online marketplace lender that primarily targets early-stage professionals. They specialize in refinance loans for students, personal loans to finance major purchases or refinance credit card debt, parent loans, and mortgages.
Online lending is nothing new, although few online lenders have achieved the same success as Social Finance.
The key difference is that SoFi connects you to investor capital to finance your loan (or refinance your credit card debt) into a better rate.
To date, SoFi has funded over $5 Billion in loans. And they just secured an additional $1 Billion in funding in late September to make even more loans.
Curious if the SoFi model can help you save money? This review will tell you everything you need to know.
Overview of SoFi Personal Loans
SoFi began offering personal personal loans in 2015 to provide it customers with an option to finance a major purchase or refinance high interest rate loans (including credit card loans).
If you are already familiar with SoFi loans, you will find their personal loans work in a similar fashion.
Here is a quick summary of what you need to know before applying for a personal installment loan from SoFi:
- You can borrow between $5,000 and $100,000 for any personal, family, or household purpose.
- Choose a term of 3, 5, or 7 years to repay your loan.
- Each payment will include principal and interest. So you are paid in full at the end of your term.
- There are no origination fees or prepayment penalties. This compares with an origination fee of 1-5% with some leading peer-to-peer lenders.Interest rates are extremely low.
- And you can choose between a fixed rate or variable interest rate loan.If you set up automatic payments, you can save even more by getting a 0.25% discount on your rates!
- Unemployment Protection protects you in case you lose your job.
- All SoFi personal loans are unsecured, which means you do not need to provide collateral.
- Low late payment of $5 or 4% of the loan amount (whichever is lesser) if a payment is more than 15 days late.
- Checking your interest rate will not hurt your credit score.
If you want to see how SoFi stacks up against the competition, just check out the table below.
Personal Loan Comparison
As you can see, they offer the lowest interest rates and most flexible terms we have seen for an unsecured personal loan.
Plus, no origination fee, no prepayment fee, unemployment protection, and generous terms.
So, just how low are SoFi's interest rates?
Interest Rates and Loan Fees
With SoFi, you can expect to find the lowest interest rates out there for your installment loan.
As we alluded to earlier, you can choose either a fixed rate or variable rate for your loan.
Fixed rates range from 5.95% to 12.99% (after taking into account the AutoPay Discount). These rates will never change during the life of your loan.
Variable rates range between 4.80% to 11.40%, which includes the AutoPay discount.
The variable rate does currently offer a lower APR. But you should know that your rate may rise if the LIBOR rate increases. (If you are not familiar with LIBOR, more on that in a second.)
The good news is interest rates on variable rate personal loans are capped at 14.95%. This means you won't have to worry about your rate increasing too much down the road and making your loan unaffordable.
Even better news is that you can save money on your approved rate by enrolling in AutoPay. This will allow SoFi to directly debit your checking account each month. In return, you will save 0.25% on your APR. Which adds up to real money over the life of a 3 to 7-year loan.
Payment Examples for a $10,000 Loan
So, for those unfamiliar with LIBOR, it stands for the London Interbank Offered Rate. And it works very much like a European version of the Prime Rate. This rate is currently rock bottom, so you cannot expect your variable interest rate loan to decrease.
But, even if it does increase, SoFi caps your APR at 14.95%. Try getting that with a credit card!
Qualifying for a SoFi Personal Loan
To be qualify for a personal loan with SoFi, you must be a U.S. citizen, live in an eligible state, and be employed at the time of your application.
SoFi currently offers personal loans in the District of Columbia and 47 states. The only exceptions are Nevada, Tennessee, and Mississippi.
SoFi focuses on your total situation to make lending decisions more than a particular credit score. This means that they take the following analysis to qualify applicants:
- They will examine you income and expenditures as a part of a cash flow analysis. What SoFi wants to do is confirm your ability to meet your loan payments.
- When examining your credit, they are more interested in your history with credit. They want to see a strong history of repayment.
To check the rates and terms you qualify for, SoFi conducts a soft credit pull that will not affect your credit score. However, if you choose a product and continue your application, they will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit pull.
If you're approved for a loan, your application will be verified and you will need to provide an electronic signature on your loan application.
You should receive the funds as a direct deposit in your bank account within a few days.
You can make loan payments online at SoFi.com or sign up for AutoPay and get a 0.25% interest rate discount.
Keep in mind personal loans are not designed for education expenses. If you need money for school, you might want to look into SoFi's student loans.
A unique benefit that you won't find with other lenders is SoFi's unemployment protection.
If you lose your job through no fault of your own, you may apply for So-Fi's Unemployment Protection Program. If approved, SoFi will put your loans into forbearance. This means your monthly loan payments will be suspended.
Social Finance will even help you find a new job with career services.
Unemployment Protection is offered in three month increments, and is capped at 12 months, in aggregate, over the life of the loan.
During each three-month forbearance period, unpaid interest will continue to accrue and will be capitalized (added) onto your principal balance.
You do have the option to make interest-only payments during this period in order to prevent the interest from increasing your principal balance.
The Bottom Line
If you have a credit card with a 10% APR, or even if you are finishing up a 0% APR offer, SoFi can probably save you money.
If you are looking to finance a big purchase, a Social Finance personal loan also can save you money.
Well, it's hard to beat So-Fi's low interest rate, no origination fee installment loans.
And, unlike credit card debt, you will get a set repayment schedule. There will be no balance transfer fee to add to your burden. And you can save a great deal of money just because you will be constant reducing the principal balance.
Add to this So'Fi's great customer service, employment protection program, and other perks, and you can see why SoFi is our top recommended lender for personal installment loans.
When compared to the competition, we think your best option will be a SoFi personal installment loan.
Whether you are looking to consolidate your credit card debt, make a major purchase, or refinance a higher interest rate loan, check out SoFi.