SoFi is an online lender specializing in personal loans, mortgages, student loans, and loan refinancing. For borrowers with strong credit and high incomes, a SoFi personal loan offers attractive rates and a transparent lending process.
Unlike traditional financial institutions, SoFi uses a unique underwriting process that evaluates your career, income and expenses, financial history, and education. A strong application is rewarded with low interest rates; the average three-year loan holds a rate of 8.5%.
Applicants with thin credit are also encouraged to apply, so if you’re fresh out of college with a good job or have been in the workforce but simply haven’t accumulated a lengthy credit history, a SoFi loan could be a good choice for you.
Read on to find out what kind of loan terms the company offers, how to apply, and how to decide which loan product is the best fit.
SoFi Personal Loans
SoFi offers personal loans with both fixed rates and variable rates. Loan funds can be used for personal, family, or household purposes, but not for education expenses.
You can save money with a 0.25% discount on your interest rate if you elect to sign up for autopay, which automatically deducts your balance from your bank account each month.
When you enroll in autopay, fixed rate loans range between 5.95% and 12.99% APR. Without enrolling in autopay, that range goes up to 6.2% and 13.24%.
For variable rate loans, expect to see APRs ranging between 4.82% to 11.42% with autopay, or 5.07% and 11.67% without it. Variable rates for personal loans are capped at 14.95% APR.
You can select one of three term lengths for your loan: 3, 5, or 7 years. The minimum loan amount is $5,000 and the maximum is $100,000, although higher loan amounts are only available to the strongest applicants.
SoFi prides itself on offering a transparent process that is quick and easy. There are no origination fees, closing fees, or pre-payment penalties so it’s easy to understand exactly how much your loan actually costs.
All personal loans with SoFi are unsecured, meaning there is no collateral required. Personal loans are not available in Mississippi or Nevada and some of the loan requirements may vary depending on where you live due to specific state regulations.
When you take out a loan, SoFi reports your payments to all three credit bureaus, so it can help your credit score as long as you pay on time each month.
On the flip side, late payments are likely to show up on your credit report quickly, so it’s important to stay on top of your monthly balance in order to maintain your credit health.
What kind of borrower is SoFi looking for? The company’s underwriting standards are actually quite different from traditional lenders.
Your credit score is important, but other factors weigh more heavily, including a flawless payment history, a high-income potential, and the type of industry you work in.
It’s ok if your credit history isn’t very long, as long as your cash flow can cover your new loan amount on top of your regular day-to-day expenses. There is no minimum credit score required to qualify for a SoFi personal loan, but most borrowers have at least a 700. The median gross income is $106,000.
There are no set limits to the length of your credit history or your debt to income (DTI) ratio. Most lenders want to see no more than a 36% DTI but SoFI might be more lenient if you demonstrate that you have the financial means to meet all of your payments each month.
The first step in the application process is to pre-qualify for a personal loan with SoFi. This allows you to check what rates you’re eligible for with the added benefit of not having a hard pull affect your credit score. The pre-approval process is quick and easy; in fact, it takes less than two minutes.
Start by creating an account with your name, state of residence, email, and password. Once you do that, you’ll enter some information about your education and employment history. The good thing is that you don’t have to enter your social security number at this point.
Next, you’ll be presented with several different loan options, including both fixed and variable interest rates. Remember that you’ll get a lower interest rate if you sign up for the auto pay option. Once you review your choices, you can select the loan you’d like to receive.
Your next step is to upload copies of requested documents that verify both your identity and income. This likely includes pay stubs and bank statements. SoFi then checks your information, including a hard credit check, and ideally approves your loan.
Once You’re Approved
When your application is approved, SoFi sends a loan agreement that requires an electronic signature. You’ll then receive a quick phone call where a staff member confirms your address.
After that, your funds are disbursed within a few short business days. Payments for fixed rate loans are due on the 1st of each month and variable rate loans are due on the 10th of each month.
Any payment received more than 15 days late is subject to a penalty fee. The fee is either 4% of your payment amount or $5, whichever costs less. Your payment options include electronic ACH transfer, bill pay through your bank, or paper check.
In the event you lose your job (and it wasn’t your fault), you can apply for Unemployment Protection, which is essentially a temporary forbearance on your loan payments.
You can suspend making payments in three-month increments up to 12 months. Note that you’re limited to a total of 12 months for the entire life of the loan, not for each bout of unemployment.
Interest continues to accrue during unemployment protection and will be added to your principal balance at the end of the forbearance period. In the meantime, you must qualify for and receive federal unemployment benefits.
You must also work with Sofi’s career strategy department in finding a new job. When you begin repaying the loan again, your monthly payment should reflect your new monthly balance including the additional interest that accrued.
SoFi began in 2011 as a student loan company for young graduates with high levels of income. The three founders met at Stanford’s graduate business school and started off with a pilot program at their alma mater.
Loans were initially aimed at current students and funded by alumni. Since then, SoFi no longer focuses solely on universities and has branched out to include mortgages and personal loans. Accordingly, the company moved from alumni-backed loans to a more traditional investor model.
Advice for Taking Out a SoFi Personal Loan
Before you jump on the chance to take out a personal loan with SoFi, consider these few simple steps to ensure you’re making the best financial decision.
Shop Around for the Best Product
Look at several lenders before making a decision on which loan is best for you. Most pre-approval applications only require a soft pull on your credit report, so it doesn’t affect your score in any way.
If you have a high credit score and strong income, there are also other options to explore depending on your financial needs.
For credit card consolidation, consider paying off everything with a new card offering 0% interest rates. As long as you can afford the payments and pay off the balance within the introductory rate period, you could save a lot of money.
Another option to access funds is to tap into your home equity. With strong credit and equity in your property, you could easily qualify for a home equity line of credit or cash-out refinance, both of with may have lower interest rates even than a personal loan.
Calculate Your Payments
Qualifying for a loan, no matter how small or large, doesn’t automatically mean you can afford the payments. Once you get pre-approved and find out your offered rates and terms, plug the numbers into a repayment calculator to compare your options.
Consider both your monthly payment amount and how much you’ll be paying in interest over time. Remember that a lower monthly payment could result in a higher amount of interest paid.
Review Your Credit Report
Before applying for any loan, double check the information on your credit report to ensure it is accurate. This is especially helpful when applying for a loan through a company like SoFi because payment history is such a big factor in your approval.
Start off by ordering each report from the three credit bureaus: Equifax, Experian, and TransUnion. You can get them for free once a year. Then, scan each page thoroughly to make sure there is nothing out of line.
Complete this step at least a month before you plan on applying for a personal loan because it could take that long for the credit bureaus to make any updates.