Pros and Cons to using SoFi for credit card debt consolidation loan
Welcome to The Yukon Project. I’ve analyzed millions of credit reports, hundreds of thousands of people’s financial data, and designed programs to help people improve their financial lives. Here I’m going to break down how to consolidate credit card debt with SoFi.
Let’s get to the point first. SoFi has built a really good option for credit card consolidation loans. They have the features that are helpful when you are trying to get on top of your credit card debt. I have a lot of good things to say about their program and only one potential negative thing. Because I have so many good things to say, I do need to be clear: SoFi is not sponsoring this video or article.
The pros to SoFi’s credit card debt consolidation loans
Let’s get started with the long list of pros to SoFi’s credit card debt consolidation loans.
No extra fees
The first pro is that SoFi doesn’t charge any extra fees. And I really mean no fees, even the fees that would be reasonable and expected. Miraculously, they don’t charge late fees if you are past-due on a payment. You also won’t be squeezed throughout the life of the loan by account maintenance fees or NSF fees. And they don’t charge an origination fee at the start of your loan. This means that the entire cost of borrowing from SoFi will be found in their interest rate. It’s important to point out that an origination fee is represented in the APR. The APR would be the interest rate plus the origination fee. Origination fees don’t get reimbursed if you pay the loan off early. Because SoFi doesn’t have an origination fee, you would be rewarded for paying the loan back early.
Discounts
SoFi also offers a couple of discounts that can save money on the interest rate. You can save .25% if you sign up for autopay and you can save an additional .25% if you use direct deposit into a SoFi bank account.
Direct pay off
Another good thing about SoFi for credit card debt consolidation is that they will pay your credit cards off for you directly. This is convenient, but there’s another reason why I think it is really important: it shows that they are aware that the debt consolidation loan is meant to replace other debts and not stack on top of them. So, it should mean that it is easier for you to clear their debt-to-income ratio thresholds. In short, it should be easier to be approved compared to a lender that does not offer direct pay off, especially if you have substantial credit card debt.
Large loan amounts (where needed)
And if do you have substantial credit card debt, SoFi might be one of the few lenders who will lend you enough money to consolidate all of it. Their maximum loan amount is $100,000. Few of us would have that much credit card debt, but if you do, SoFi is one of only a couple of companies that could help you. If you have more than $50,000 in credit card debt, I would suggest that you word directly with a certified debt counselor with a non-profit to explore the strategies that would be best for you.
Cosigners
Another good thing about SoFi is that they accept cosigners on their loans. A cosigner would be responsible to pay back the loan if you fail to. If you can qualify for a debt consolidation loan and get the best rate on your own, there is little reason to entangle your spouse or loved-one in the process. But, adding a cosigner can help you get approved if you otherwise wouldn’t have been. They can also help you qualify for a higher loan amount or a lower APR. This is especially true if your cosigner’s credit score is better, debt-to-income ratio is lower, or income is higher.
The con to SoFi’s credit card debt consolidation loans
There’s not much negative to say about SoFi, but let me tell you why SoFi might not be the lender for you. Only people with good to excellent credit and decent incomes will qualify for a SoFi credit card debt consolidation loan. If you are in that category, great. But there are a lot of people who will not be able to land a SoFi loan.
But, whether you think you can consolidate credit card debt with SoFi loan or not, you owe it to yourself to shop around. Each lender is different and one might offer you a lower rate. At the Yukon Project, we’ve tried to make shopping around easy. You can go to our marketplace page and apply directly to SoFi. Behind the scenes, we will check your rate with up to 40 other lenders. The application uses a soft credit check and so it won’t affect your credit score. We will show you all of your approved offers so you can pick the loan that is best for you.
SoFi has built a really good product with the right features that have a focus on what people need. I think you could do a lot worse then going with SoFi. But, remember, that doesn’t mean that they will give you the lowest rate or the best terms. Get 2-3 approved offers in hand before you accept a loan. That way, you can feel confident that you are getting the best deal you can in your situation.
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