Review of SoFi Personal Loan for Purchases or Credit Card Refinancing
Social Finance (SoFi) is our current recommended lender for personal loans, credit card refinancing, 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.
SoFi is an online marketplace lender that primarily targets early-stage professionals. They specialize in refinance loans and personal loans. Although online lending is nothing new, few online lenders have achieved the same success. To date, SoFi has funded over $15 Billion in loans.
Curious if SoFi can help you save money? This review will tell you everything you need to know.
Overview of SoFi Personal Loans
SoFi began offering personal loans in 2015 to provide customers with an option to finance a major purchase or refinance high interest rate loans, including credit card loans. If you’re already familiar with SoFi loans, you’ll 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.
You can choose a term from 2 to 7 years to repay your loan.
Each payment will include principal and interest, so you’re 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.
You can choose between a fixed rate or variable interest rate loan. If you set up automatic payments, you can save 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 won’t impact your credit score.
With SoFi, you can expect to find the lowest interest rates available for your installment loan. Fixed rates range from 5.74% to 20.28%, after considering the AutoPay discount. These rates will never change during the life of your loan.
Fixed rates from 5.74% APR to 20.28% APR APR reflect the 0.25% autopay discount and a 0.25% direct deposit discount. SoFi rate ranges are current as of 1/18/22 and are subject to change without notice. Not all rates and amounts available in all states. See Personal Loan eligibility details. Not all applicants qualify for the lowest rate. Lowest rates reserved for the most creditworthy borrowers. Your actual rate will be within the range of rates listed above and will depend on a variety of factors, including evaluation of your credit worthiness, income, and other factors. See APR examples and terms. The SoFi 0.25% AutoPay interest rate reduction requires you to agree to make monthly principal and interest payments by an automatic monthly deduction from a savings or checking account. The benefit will discontinue and be lost for periods in which you do not pay by automatic deduction from a savings or checking account.
Variable rates range between 4.78% to 10.88%, 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.
The LIBOR, London Interbank Offered Rate, works very much like a European version of the Prime Rate. Currently, this rate is at rock bottom, so your variable interest rate loan won’t decrease.
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 later. Even better news is that you can save money on your approved rate by enrolling in AutoPay. This allows SoFi to directly debit your checking account each month. In return, you’ll save 0.25% on your APR, which adds up to real money over the life of a 3-to-7-year loan.
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 qualify for a personal loan, 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 49 states. The only exception is Mississippi. SoFi focuses on more than just credit scores when making lending decisions. They take the following analysis to qualify applicants:
SoFi examines your income and expenditures as a part of a cash flow analysis to confirm your ability to meet your loan payments.
SoFi is more interested in your credit history. 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 won’t affect your credit score. However, if you choose a product and continue your application, they’ll 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’ll 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 receive a 0.25% interest rate discount. Keep in mind personal loans aren’t designed for education expenses. If you need money for school, you might want to investigate 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.
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 added onto your principal balance. You do have the option to make interest-only payments during this period 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’re looking to finance a big purchase, a Social Finance personal loan also can save you money.
How? Well, it’s hard to beat So-Fi’s low interest rate, no origination fee installment loans. And, unlike credit card debt, you’ll get a set repayment schedule, no balance transfer fee, and the constant reduction of the principal balance can save you money.
Add to this SoFi’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.
Whether you are looking to consolidate your credit card debt, make a major purchase, or refinance a higher interest rate loan, check out SoFi.
Credit Shout is a community of personal finance experts dedicated to helping you save money and make smart financial decisions. Learn how to master your credit card rewards, improve your credit score and start eliminating your debt.