SoFi Review: Personal & Student Loans with Low Rates and No Fee

SoFi Review: Personal & Student Loans

Updated March 4, 2017

SoFi is an online loan company that offers student loan refinancing options, mortgages and personal loans. SoFi offers some of the lowest interest rates and the best consumer experience in the market. We have researched thousands of products from hundreds of companies, and SoFi is one of our favorites. However, they have strict credit criteria and target people with good jobs, good income, a proven ability to manage a budget and good credit history. If SoFi* approves you, you will probably have a difficult time finding a lower interest rate anywhere else.

In this post, we will review both Student Loans and Personal Loans. (They have just launched mortgages, and we will be updating this post later with a review of that product). For each, we will discuss:

  • The details of the product: how much can you borrow, and at what price
  • Approval criteria: how does SoFi underwrite, and who are they likely to accept

In addition, at the end we will give you more details of SoFi, including who funded them, how big they are and their reputation.

Student Loan Refinance (Skip Ahead for Personal Loans)

SoFi has just reduced the minimum loan amount. You can now refinance as little as $5,000 of student loan debt. There is no cap on how much you can refinance. Based upon your cash flow, SoFi will try to provide an option to refinance all of your student loan debt.

There is no origination fee and no prepayment penalty. It offers some of the lowest rates out there. Fixed APRs range from 3.375% – 6.74%, and variable APRs range from 2.365% – 6.29%. These rates are available so long as you enroll in auto-pay.* Given that interest rates are at an all-time low, you should think carefully before signing up for a variable interest rate. If you can pay off your loan in a short period of time, you could save a lot of money. If it will take you longer, you may not want to take the interest rate risk.

You can refinance on a 5, 7, 10, 15, or 20 year term.

For example, if you borrow $30,000 on a 10 year term at an APR of 4.615%, your monthly payment will be $312.58. Under those terms, you’re paying back a total of $37,509.60 (120 payments). If you borrow the same amount, but have a 6.8% APR, your monthly payment is $345.24, paying back a total of $41,428.80. In this case, SoFi’s low rates have the potential to save you nearly $4,000.

SoFi will refinance both private and federal student loans. However, if you refinance a federal loan you will give up all federal protections and programs, including income-based repayment programs. SoFi is unique among private lenders because it offer unemployment insurance, free of charge. If you lose your job for no fault of your own (you can’t quit), SoFi will suspend your monthly payments until you find a new job. You can do this for up to 12 months. The interest that accrues during this period would be added to the loan.

SoFi also offers an entrepreneur program to help graduates who dream of owning a business.

Under this program, loans can be deferred for six months so borrowers can focus on growing their businesses. SoFi provides access to networking events, mentors, and investors.

Refinancing with SoFi isn’t an option for everyone. First, refinancing is currently unavailable to those residing in Nevada, and variable rate options aren’t available to those in Ohio or Tennessee.

Second, SoFi has a list of available schools and programs it services. If your school or program isn’t on that list, you won’t be eligible to refinance.

Third, SoFi typically requires applicants to have excellent credit. It occasionally accepts co-signers – you must call to review your situation with a representative. However, there’s no co-signer release if you move forward with one on your loan.

To be eligible to refinance your student loans with SoFi, you need to meet the following requirements:

  • You must be a U.S. citizen or permanent resident 18 years or older
  • You need to have a 4-year undergraduate or graduate degree from a Title IV accredited institution
  • You have to be employed or have an offer of employment starting in 90 days from the time you apply
  • You need to be in good standing on your current student loans
  • You should have a good, stable employment history
  • A strong monthly cash flow is a must
  • An excellent FICO score will improve your chances of being approved

The application process is straightforward and SoFi’s pre-approval should take you less than 15 minutes to complete. You likely won’t need most of the documents listed below until you’re ready to move forward with a loan, but they’re good to have on hand while you’re shopping around.

  • Existing student loan information (SoFi will need your account information for the loans you wish to finance)
  • Employment information – salary, offer of employment, length of employment
  • Most recent pay stubs as proof of income and employment (if you’re currently employed)
  • Diploma or transcript in the event SoFi needs to verify your graduation

It’s good to note SoFi accepts screenshots from your PC and pictures taken from a phone, so if you don’t have access to a scanner, there’s no need to worry.

If you’re ready to get started, you can apply for a refinance and check your rate by clicking the button below.

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Details on SoFi’s Personal Loan

At SoFi, you can borrow between $5,000 and $100,000.

There is no origination fee, no prepayment penalty and no balance transfer fee. They are truly unique in this regard.

You can borrow the money for 3, 5 or 7 years.

In addition, SoFi offers unemployment protection. Unlike traditional personal loan companies, they are not looking to make money from unemployment insurance. Instead, they are offering it as a feature and a brand promise. And the insurance is generous. If you lose your job through no fault of your own, you will be given a payment holiday. Interest will continue to accrue on the loan (and be added to the balance), but no payment will be due and your loan will continue to be reported as current to the credit bureau. You can have 3 consecutive months of payments made at a time, and you can have up to 12 months of payments made during the life of the loan. That offers great flexibility. In addition, they offer job placement services to help you find a job.

Fixed interest rates range from 5.70% to 14.24% – but you have to sign up for auto-pay in order to get these rates. In addition, SoFi offers variable interest rates from 4.79% – 10.88% with auto-pay. The rates are based upon 1-month LIBOR and are capped at 14.95%.*

You can use the loans for almost any purpose: pay off credit card debt, home improvement, or anything else because the money can be deposited as cash in your checking account.

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What Does It Take to Get Approved?

In order to be approved for a loan, you must at least meet the following requirements:

  • You are a US citizen or permanent resident
  • You are at least the age of majority in your state (typically 18)
  • You are currently employed
  • You have graduated from a selection of Title IV accredited universities or graduate programs (only for the student loan product. For personal loans, there is no university requirement).

Personal loans are not available to residents of the following states: Mississippi, Nevada and Tennessee.

If you fail to meet the above criteria, you will be rejected. However, just because you meet these criteria does not mean that you will be approved. SoFi will:

  • Perform an analysis of your ability to repay. They do a “cash flow analysis” looking at your income and expenditure, making sure you can pay
  • Perform an analysis of your history with credit. Missed payments and defaults will most likely get your rejected. You need to have a strong history of repayment. Although they are not a FICO-driven lender (because they look at education, employment and cash flow), the following people will likely have a difficulty getting approved:
    • People who do not have excellent credit. In particular, if you have missed payments or have rapidly built up debt, you could find it difficult to qualify.
    • If you have a “thin credit file”, you will still have a good chance of getting approved. A thin file means that you do not have much information in your credit report. Although that could be a problem with traditional credit scores, SoFi might still be willing to work with you.
    • People with collection items, judgments or other negative legal action

SoFi offers some of the lowest interest rates out there, and they are picky about who they approve. If you have a good degree, a good job and a history of making payments on time, you will likely be able to benefit from SoFi.

And here is the best news: you can check to see if you will be approved, and the interest rate you would receive, without hurting your credit score. SoFi uses what is called a “soft pull” to determine your interest rate and your loan amount.

Given how low the interest rates are at SoFi, if you have a college degree you should take the 3-4 minutes to see if you can be approved. The only cost is your time.

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Remember that you’re in no way obligated to take a loan once you apply.

Unless you accept the loan and go through with the hard credit inquiry, SoFi doesn’t hold you to taking the loans presented to you.

All About SoFi

You can trust SoFi. They are a very well funded start-up, having raised $164 million from some of the biggest and most influential venture capital firms in the Silicon Valley.

They have also built a very strong relationship with investors, and have funded more than $2 billion in loans to date.

SoFi has been created with a mission to revolutionize the way we borrow in this country. In particular:

  • They want to make it easy for people to shop for a loan, believing that you should be able to get your interest rate without hurting your score
  • They want to create an easy, seamless experience with a great user experience
  • They want to cut out the costs of the big banks, giving lower interest rates to borrowers and higher interest rates to lenders
  • They want to create a different type of borrowing experience, by providing unemployment insurance as a free benefit.

Their mission, and their personal loan product, align to the vision of MagnifyMoney. When we created MagnifyMoney, we hoped to find lenders like SoFi, and are pleased to award them an A+ Transparency Score.

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We only have one criticism: their underwriting criteria is very tight right now. Hopefully, over time, they will be able to expand the criteria and be able to provide the great experience to people who may have experienced some financial difficulties in the past.

 

*Disclaimer

Terms and Conditions Apply. SOFI RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE. To qualify, a borrower must be a U.S. citizen or permanent resident in an eligible state and meet SoFi’s underwriting requirements. Not all borrowers receive the lowest rate. To qualify for the lowest rate, you must have a responsible financial history and meet other conditions. If approved, your actual rate will be within the range of rates listed above and will depend on a variety of factors, including term of loan, a responsible financial history, years of experience, income and other factors. Rates and Terms are subject to change at anytime without notice and are subject to state restrictions. SoFi refinance loans are private loans and do not have the same repayment options that the federal loan program offers such as Income Based Repayment or Income Contingent Repayment or PAYE. Licensed by the Department of Business Oversight under the California Finance Lender Law License No. 6054612. SoFi loans are originated by SoFi Lending Corp., NMLS # 1121636. (www.nmlsconsumeraccess.org)

Student Loan Refinance

* Fixed rates from 3.375% APR to 6.740% APR (with AutoPay). Variable rates from 2.365% APR to 6.290% APR (with AutoPay). Interest rates on variable rate loans are capped at either 8.95% or 9.95% depending on term of loan. See APR examples and terms. Lowest variable rate of 2.365% APR assumes current 1 month LIBOR rate of 0.79% plus 1.825% margin minus 0.25% ACH discount. Not all borrowers receive the lowest rate. If approved for a loan, the fixed or variable interest rate offered will depend on your creditworthiness, and the term of the loan and other factors, and will be within the ranges of rates listed above. For the SoFi variable rate loan, the 1-month LIBOR index will adjust monthly and the loan payment will be re-amortized and may change monthly. APRs for variable rate loans may increase after origination if the LIBOR index increases. The SoFi 0.25% AutoPay interest rate reduction requires you to agree to make monthly principal and interest payments by an automatic monthly deduction from a savings or checking account. The benefit will discontinue and be lost for periods in which you do not pay by automatic deduction from a savings or checking account. *To check the rates and terms you qualify for, SoFi conducts a soft credit inquiry. Unlike hard credit inquiries, soft credit inquiries (or soft credit pulls) do not impact your credit score. Soft credit inquiries allow SoFi to show you what rates and terms SoFi can offer you up front. After seeing your rates, if you choose a product and continue your application, we will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit inquiry. Hard credit inquiries (or hard credit pulls) are required for SoFi to be able to issue you a loan. In addition to requiring your explicit permission, these credit pulls may impact your credit score.

Personal Loans

* Fixed rates from 5.70% APR to 14.24% APR (with AutoPay). Variable rates from 4.79% APR to 10.89% APR (with AutoPay). SoFi rate ranges are current as of September 1, 2016 and are subject to change without notice. Not all rates and amounts available in all states. See Personal Loan eligibility details. Not all applicants qualify for the lowest rate. If approved for a loan, to qualify for the lowest rate, you must have a responsible financial history and meet other conditions. Your actual rate will be within the range of rates listed above and will depend on a variety of factors, including evaluation of your credit worthiness, years of professional experience, income and other factors. Interest rates on variable rate loans are capped at 14.95%. Lowest variable rate of 4.79% APR assumes current 1-month LIBOR rate of 0.79% plus 4.25% margin minus 0.25% autopay discount. For the SoFi variable rate loan, the 1-month LIBOR index will adjust monthly and the loan payment will be re-amortized and may change monthly. APRs for variable rate loans may increase after origination if the LIBOR index increases. The SoFi 0.25% AutoPay interest rate reduction requires you to agree to make monthly principal and interest payments by an automatic monthly deduction from a savings or checking account. The benefit will discontinue and be lost for periods in which you do not pay by automatic deduction from a savings or checking account.

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