Everything you need to know before taking SoFi Personal Loans or Debt Consolidation Personal Loan
We’ve summarize everything you need to know about SoFi personal loans. We want to make it easy for you to see whether you want to use them as a simple loan, for debt consolidation, or specifically to consolidate credit card balances. Let’s jump right into it.
First thing we’re going to look at are the loan amounts that they offer.
After all, if they don’t give you the money that you need, there’s not much point in considering them. SoFi doesn’t offer any amounts less than $5,000. They will offer personal loans as high as $100,000. Only a few lenders lend that much and SoFi is one of them.
SoFi’s terms range between 2 and 7 years. Seven years is a long time to carry a loan, but if you are borrowing as much as $100,000, you probably need a term that long. If you do end up with a larger loan with a longer loan term, you should know that SoFi will not charge a prepayment penalty. You can—and should—pay the loan off early. In fact, you should do your best to make extra principal payments in the first year of the loan. An extra principal payment in the first year is worth two or three times as much as the same extra principal payment in the last year. Early extra payments can save you a lot of money on interest. And, it will help you get out of debt faster.
Now let’s look at the costs of SoFi’s loans. SoFi’s minimum APR is 8.99% and their maximum is 29.49%. 30% is not a particularly good rate, especially for a loan that isn’t any smaller than $5,000. So, if they do offer you a rate that high, you will want to make sure to shop around before you accept it. I will say, though, that SoFi’s weighted average APR for the last few years has been 14.9%. So, not many of their borrowers are getting hit with that top rate.
SoFi does offer a few discounts that can lower the APR that you pay. You can receive discounts if you sign up for autopay, if you use the loan to consolidate other debts, or if you use a SoFi bank account with direct deposit.
I suppose the real question is who SoFi approves?
Are you likely to be able to get a personal loan from them? Well, SoFi generally focuses on people with Good-to-Excellent credit. I am guessing that you would need a credit score above a 660 to be approved. But remember that this is just a guideline. SoFi won’t just look at your credit score to determine eligibility. They will look at your payment history, your debt-to-income ratio, the amount and types of your income, and other financial information. Really, the only way to know for sure whether SoFi would approve you is to apply.
And really, there’s no harm in applying. They use a soft credit check to approve you, so applying won’t hurt your credit score. They will only do a hard credit check if you accept the loan. Then, the application will land on your credit score.
If you think you might struggle to get approved by SoFi, you could improve your chances by including a cosigner on your loan application. A cosigner is someone who agrees to pay back the loan if you fail to. If you have a loved-one with a stronger credit profile than you do, adding them as a cosigner can improve your chances of approval, get you more money, or get you a lower APR. Still, if you can get the loan that you need without a cosigner, don’t entangle a loved-one in the process.
One of the important questions about SoFi is whether they would be good for consolidating credit card balances or other debt. On this question, there are three things to consider. The first is whether they will lend enough money to cover a substantial amount of credit card debt. And, because they will lend up to $100,000, they definitely offer the amounts that should cover a meaningful amount of debt.
Second, do they offer the features that are important to someone who is consolidating debt? If you are using the SoFi loan to consolidate debt, they will use the proceeds of the loan to directly pay off your other creditors for you. It’s convenient when a lender will do that, but it’s important for another reason as well. It shows that SoFi understands that the new loan is meant to replace other debts and not stack on top of them. This means that the new loan won’t make your debt-to-income ratio worse. It should be easier to get approved because of that.
The third thing to consider is whether you can get the APR you need. As a rule of thumb, you need to get an APR that is 2-3 percentage points lower than the interest rate on the debt you are hoping to consolidate. If SoFi can do that for you, it would be a really good option. It certainly helps that SoFi will give you a discount on your loan if you are consolidating. Make sure they’ve applied that discount when you are making your final decision on whether to go with them.
What are people using a SoFi personal loan for? SoFi personal loans are unsecured. That means that they are not backed by collateral. If you struggle to repay the loan, they can’t come after your car, your home, or any other assets. That’s good. It means that the loan can’t cause a negative domino effect on your finances.
SoFi personal loans are probably best for:
- Consolidating debt or credit card balances
- Major life events like weddings, funerals, or family planning
- Unexpectedly large medical expenses
- Home improvement projects
SoFi’s minimum loan amount is $5,000, so they are not a great option for covering a small monthly shortfall or minor auto repairs. You also probably want to be a little more cautious about using loans of this size for discretionary spending like vacations or major purchases.
SoFi is a big company that offers a lot of different financial services. They have specific products for student loan refinancing, mortgages, auto financing, and home equity. So, there are other options if a personal loan doesn’t quite fit your need. I do want to be clear that this review is just of their personal loans, though. This is not an endorsement of any of those other products.
Now, let’s discuss SoFi’s fees.
This is actually where SoFi really excels. They do not charge an origination fee when you take out the loan. They will not charge you a late fee if you miss a payment. And they don’t have any other fees like failed payment fees or paper check fees. That’s all really good. That means that the total cost of borrowing from SoFi is wrapped up in their interest rate. That means the total cost of borrowing is very predictable. And, you can lower that cost over time by making extra principal payments.
So, let’s summarize SoFi Personal Loans.
SoFi offers substantial loans which are good for big issues, like debt consolidation, but probably not for small monthly short-falls. They can offer decent APRs, but it will depend on what they offer you. They target people with Good-to-Excellent credit. They offer a suite of features and do not charge any late fees. All-in-all, SoFi is a pretty good overall lender.
Whether you decide to go with SoFi or not, you owe it to yourself to shop around. Find the best deal that you can get. If you visit our marketplace page at The Yukon Project, you can apply directly to SoFi or any one of our other featured lenders. Behind the scenes, we will check your rate with up to 40 other lenders. Our partners use a soft credit check, so applying won’t hurt your credit score. We will show you all of the approved offers so you can pick the loan that’s best for you.
If you have any questions we didn’t cover, leave a comment below and we’ll try and get it answered. If you found this video useful, please like it and subscribe to our channel. Thanks for watching.
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