For far too many people these days, consumer debt makes it difficult to stay afloat financially. Paying off debt quickly can ease the stress of paying your other monthly bills on time, and refinancing your debt with SoFi personal loans can lower your interest rate.
High interest rates mean less of your monthly payments go towards the principal, and more towards the interest. Qualifying for a lower interest rate can help you become debt-free sooner and potentially reduce your monthly payment amount.
If you’re interested in lower payments and faster debt freedom, read on. Our review will break down exactly how a personal loan can help you kill your debt for less.
What is SoFi?
SoFi began as “Social Finance, Inc” in 2011 as a platform to refinance student loans. Almost a decade later, SoFi offers these financial products:
- Student loan refinancing
- Private student loans
- Personal loans
- Home loans
It’s also possible to start investing with $1 with SoFi Invest. This investing platform offers robo-advisor and self-directed brokerage accounts.
SoFi can be a good option if you want unsecured personal loans with no additional fees or prepayment penalties. Personal loans often have lower interest rates and smaller monthly payments than credit cards or other high-interest loans.
Your SoFi membership includes several unique benefits to improve your financial future. You have complimentary access to financial planners and career coaching, for instance.
Another reason to consider SoFi is for its unemployment protection benefits. SoFi may temporarily suspend your monthly payments for up to 12 months if you lose your job.
This benefit can be priceless as today’s job market is full of uncertainty.
SoFi doesn’t publish a minimum credit score to qualify for a loan. However, various online sources mention you have the best approval odds with a 680 credit score or higher.
Besides solely relying on your credit score, SoFi considers your employment history, current income, and monthly income-to-expenses ratio to calculate your loan rates.
All SoFi personal loans are unsecured and do not require collateral. You must borrow at least $5,000, though some states may have higher minimum borrowing amounts.
The maximum borrowing amount is $100,000, but you need strong credit to borrow this much.
Loans are currently unavailable in Mississippi, unfortunately.
Repayment periods are between two and seven years with a fixed interest rate. Current interest rates for all SoFi unsecured personal loans are between 5.99 percent and 18.72 percent with an 0.25 percent autopay discount.
SoFi Personal Loans Review
There are several factors to ponder as you consolidate debt. You should compare your total interest charges, loan fees, and monthly payment when comparing loan options.
SoFi loans are legit, but it’s always a good idea to compare multiple lenders for unsecured personal loans.
How to Apply for a Loan
The application process is online for SoFi is available seven days a week. Your first step is creating a free account and pre-qualify with a free rate quote.
Pre-qualifying only takes a few minutes and doesn’t impact your credit score.
Your SoFi rate quote is valid for 15 days in case you’re still comparing lender rates.
SoFi asks for these basic details to provide a rate quote:
- The total amount you want to borrow
- Desired monthly payment
- Current street address
- Verifiable annual income
- Will you apply with a co-borrower?
You must also disclose the primary purpose of your personal loan funds. Valid reasons can be to consolidate credit cards for a lower interest rate, pay off debt, home improvement, or another personal expense like a wedding.
You cannot use personal loans for real estate, business, and investment purposes.
SoFi performs a soft credit check to determine your best interest rate and maximum borrowing amount. Soft credit checks don’t impact your credit score, but SoFi looks at your credit report to analyze your financial history.
You’re more likely to pre-qualify if you have a clean credit history. A series of recent credit applications or prior loan defaults may hurt your approval odds.
If you have a cloudy credit or employment history, SoFi accepts joint loan applications. Your co-borrower must live at your same street address.
Joint loans are a good option if the other person has a better financial or employment history than you.
You will see several loan repayment options after SoFi completes the credit check. Shorter loan terms may have higher monthly payments but lower interest rates than longer loans.
After choosing your desired repayment length, you can apply for a loan. The lender performs a hard credit check to provide a firm credit offer.
You will electronically sign the documents if you accept the offer. A representative will call you to verify your home address and answer any questions you may have about your new loan.
SoFi deposits your loan funds into your bank account within a few business days. Your first monthly payment is due 30 days after the disbursement date.
Below are the basic eligibility criteria for SoFi personal loans:
- At least 18 years old
- A US resident, permanent resident, or visa holder (E-2, E-3, H-1B, J-1, L-1, or O-1)
- Are currently employed, earn sufficient income from other sources, or have an employment start date within the next 90 days
SoFi states the best candidates will have a responsible financial history and a stable monthly cash flow.
Your credit report shows your financial history. You must be able to verify your income. The lender may take your work experience and career field into consideration to determine your interest rate and loan amount.
You may decide to avoid SoFi if you have a high debt-to-income ratio or recent loan defaults. A credit builder loan can help improve your credit score so you can qualify for a better personal loan later.
Loans might be harder to qualify for than other lenders if your credit score is in the upper 500s or low 600s. But SoFi can offer competitive rates if you have a promising career or a credit score of at least 680.
Rates and Terms
The best fixed interest rate for SoFi personal loans is currently 5.99 percent with a two-year repayment term. You can qualify for this rate if you have a strong credit history and high monthly income.
SoFi also requires you to enroll in monthly autopay to get a 0.25 percent interest rate discount to get the lowest possible rate.
The maximum interest rate is currently 18.72 percent. This rate is for those with imperfect credit or high monthly expenses. The highest rate can still be less than what the credit card companies charge.
Most borrowers can choose from a repayment term of either two, three, four, or five years. Well-qualified borrowers may have the option of a six or seven-year repayment term.
But these extended repayment periods are usually only for loans closer to the $100,000 maximum loan amount.
During the prequalification process, SoFi lists the best interest rate with each repayment term you qualify for.
Below is an example of what your interest rates options might be for a $15,000 loan:
- Two years (24 monthly payments): 8.145 percent
- Three years (36 monthly payments): 8.512 percent
- Four years (48 monthly payments): 9.112 percent
- Five years (60 monthly payments): 9.420 percent
Your rate quote also shows the minimum monthly payment amount.
You might qualify for a variable interest rate, but you may need to call SoFi to request this rate option. Variable rates can be lower than fixed rates.
However, a surprise rate hike can increase your total loan costs and force you to make a new budget so you can pay the bills.
Other lenders may charge these one-time fees that SoFi doesn’t:
- Application fee
- Origination fee
- Late fees
- Prepayment penalties
Most lenders no longer charge application or prepayment fees, but origination fees are common. This fee is usually between one and six percent of your total loan amount. Most lenders deduct the fee from your initial loan balance.
SoFi’s only loan cost is your monthly interest payment.
It’s possible to repay all SoFi personal loans early without financial penalty. Paying back your personal loans early also reduces your total loan costs.
The lender doesn’t charge late fees if you miss a payment due date. However, missing payments increases your total interest charges as you don’t pay your loan principal on schedule.
Late or partial payments can also lead to a credit score drop and lead to default.
Your current lender may charge prepayment fees to consolidate your debt with personal loans. If so, the other lender’s fees may cost more than your potential savings with SoFi.
You are unlikely to encounter fees if you consolidate credit cards as you’re not doing a credit card balance transfer.
Top Features of a Loan with SoFi
In addition to no hidden fees, SoFi loans come with several unique benefits.
SoFi lets you apply for personal loans with a co-borrower who lives at the same address as you. This can be a smart move if you have imperfect credit or cannot qualify for a loan by yourself.
Your partner’s credit and employment history can help you get a better rate.
The approval process for joint loans can take an extra two weeks. You and the co-borrower are both equally responsible for making the monthly payment.
Most SoFi loans have unemployment protection if you lose your job through no fault of your own. Your loan must be in good standing as well.
Most loan companies require monthly payments during tough times.
It’s possible to place your loans in forbearance status in three-month increments, up to a maximum of 12 months over the life of your loan.
Interest still accrues on your loan balance during this time. You can make interest-only payments to prevent adding the interest to your loan balance once the forbearance period ends.
Job search assistance and career coaching are available to help you start making money too.
SoFi lets you change your payment due date on fixed interest rate loans once a year. You can change your payment due date to fall between the 1st and 25th of the month.
This feature does not apply to variable-rate loans, which are always due on 10th of each month.
The SoFi mobile app is available for Android and iOS devices. You can monitor your loan balance, manage payments, and unlock the other member benefits within the app.
Pros and Cons
SoFi personal loans can offer competitive interest rates and repayment terms. This flexibility makes it easier to choose the best monthly payment and interest rate that fits your budget.
- Free rate quotes: Easily see what your interest rate and monthly payment options are without affecting your credit.
- No hidden fees: SoFi doesn’t charge application, origination, or prepayment fees. Your only loan cost is the monthly interest payment.
- Joint personal loans: The lender offers joint loans when the co-borrower lives with you and can help you qualify for better loan terms.
- Member benefits: Unemployment protection and career coaching are two benefits that few lenders provide.
- Need a strong credit history: You need good credit and a relatively high annual income to qualify for the best rates. Other lenders are better if you have imperfect credit or a high debt-to-income ratio.
- Personal loans are unavailable in Mississippi: Most US residents can apply for a personal loan. Mississippi residents must use a different lender.
You should consider SoFi if your credit score is in the upper 600s or higher, and you have no recent defaults on your credit report.
All SoFi rate quotes are hassle-free and let you easily compare your monthly payment and total loan costs.
SoFi lets you quickly see if you can save money by consolidating credit cards and other high-interest debt. Your potential savings are higher if you take action soon when your debt balance is larger.
Open a SoFi account to compare your loan options without hurting your credit. It’s free to check your rates and only takes a few minutes.
What are you doing to repay debt? How much are you paying in interest each month?
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