SoFi debt consolidation loan can be a great tool to get you out of debt faster
If you can get a lower interest rate by consolidating your debt with SoFi then you can save you a lot of money! Here’s how you can add rocket fuel to the process and get out of debt faster. And spend A LOT less on interest!
First thing is that you should only consolidate your debt with SoFi if they will give you an interest rate that is at least a few percentage points lower than what you are paying with your current debts. If you are a qualified borrower, SoFi could get you that lower interest rate. They offer rates between 9% and 24.5%.
You could save you some serious cash in the long run. Plus, by combining all your debts into one SoFi loan, you might even be able to spread out your payments over a longer period, which means a smaller monthly bill. That could give you the breathing room you need to get on top of your finances. But before you get too excited about that lower monthly payment, let me tell you about that rocket fuel.
REDUCE YOUR INTEREST PAYMENT WITH SOFI DEBT CONSOLIDATION. BUT DON’T REDUCE YOUR PAYMENT!
This will get you out of debt quicker! Here’s why this is so important.
While a lower payment might feel like a weight off your shoulders in the short term, dropping that monthly payment may not be the smartest move for your financial future. If you can swing it, you should do everything in your power to keep your monthly payment the same (or even bump it up a notch) after consolidating your debt.
Why, you ask? Well, by keeping your payment the same or increasing it, you’ll be throwing more money at your principal balance each month. That means getting out of debt faster and saving yourself a ton of money on interest in the process. Even a small increase in your monthly payment can make a world of difference in the grand scheme of things.
A deeper look at how it works
This is especially important in the first few months of getting a new loan. You might think that making an extra $100 payment in the twelfth month of your loan is the same as if you did it in the second month of the loan. $100 is $100, right? Actually, no. Consolidation loans are amortized which means that they are designed to keep a consistent payment every month from the beginning to the end. That payment is made up of two things: the interest expense and the principal payment. The interest is just a calculation based on the total outstanding balance. That means that the first payments are mostly just paying interest because that’s when your outstanding principal is at its highest point.
So, an extra principal payment at the beginning of your loan term will save you money on interest for the rest of the time you are in debt. Depending on the interest rate of the loan and the length of the term, an extra $100 payment in the first months of your loan term could be worth more than $150.
So, making extra principal payments can be huge. But first you have to get a consolidation loan with the lowest possible interest rate. That’s why I always recommend shopping around. SoFi might be able to lower your interest rate, but another company might offer you something even lower. At The Yukon Project, we’ve tried to make shopping around easy. If you go to our marketplace page, you can apply directly to SoFi, but behind the scenes, we will check your rate with up to 40 other lenders. Applying won’t affect your credit score and we will present you with all the offers, so you can decide the best loan for you.
SoFi debt consolidation loan can be a great tool to get you out of debt faster
Debt consolidation can be a great way to help you get out of debt, but it works best when you can score a much lower interest rate and make extra payments early in the life of your loan. After all, why pay SoFi any more interest than you absolutely have to?
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