Whether you want to consolidate debt, finance a big purchase, or need to deal with an unexpected expense, sometimes you need quick access to a large sum of money. If that’s the case, a personal loan can help — but only if you use it responsibly and pick your lender wisely.
If you’re in the market for a personal loan, SoFi is a popular personal loan lending company that offers loans with competitive interest rates and no fees, as well as perks like an “unemployment protection” program. The catch? You need to have good credit and stable employment to qualify for a loan from SoFi.
In addition to personal loans, SoFi offers various financial products, including private student loans, student loan refinancing, home loans, auto loan refinancing, banking and investing services, and a credit card. It also offers a mobile app for a convenient, digital experience across all their products.
What to Know Before Getting a Personal Loan
Personal loans can be a quick way to access cash when you need it, but it’s important to use them wisely. Before taking out a personal loan, you should consider whether it’s really necessary and come up with a plan to pay it off. Always do your research and comparison shop with multiple lenders to find the best personal loan rate.
Be aware that the exact rate you get may differ from the advertised rates since rates depend on your credit score, income, and loan value and terms. Some lenders will let you pre-qualify for a loan or check your rate with only a soft credit inquiry, which won’t affect your credit score. Other lenders may require a hard credit inquiry, which could lower your credit score by a few points. When you officially apply for a loan, all lenders will require a hard credit inquiry. In addition to the interest rate, check if the lender charges any fees — such as origination fees, prepayment penalties, or late fees — that might raise the cost of the loan.
Once you’ve taken out a loan, be sure to make payments on time to avoid any additional fees or interest charges. Late payments can also damage your credit score.
Finally, know the difference between a secured loan, which uses an asset such as a house or car as collateral, and an unsecured loan, which requires no collateral. Secured loans may offer lower interest rates, but they’re riskier for the borrower since you can lose your collateral if you default on the loan.
Alternatives to Personal Loans
Although a personal loan is a viable strategy to pay for big expenses, it’s not the only option. Some alternatives to personal loans include:
- A home equity loan, home equity line of credit (HELOC), or a cash-out refinance. These three options are similar since they allow homeowners to tap into home equity for cash upfront. Because these financing methods are secured by your house, you may be able to get better rates than an unsecured personal loan. But each one has its unique pros and cons as well.
- A balance transfer credit card. Certain credit cards have introductory offers of 0%-APR for a set amount of time, usually 15-18 months. If you’re seeking to consolidate debt, one strategy is to transfer your debts onto one such card, pay off the balance before the introductory period ends, and pay no interest on the balance. If you use a balance transfer credit card, it’s especially important you have a plan to pay off the balance before the end of the introductory period; otherwise, you’ll be on the hook for high credit card APRs. Also, be aware that credit cards with balance transfer offers are typically only available to those with good credit.
- Personal savings. If your money needs aren’t urgent, consider saving in advance for a big purchase and paying with cash rather than taking out a loan. Having an emergency fund in place can also help you in the event of unexpected expenses. Experts recommend having three to six months’ worth of expenses in an emergency fund. You can take these steps to start building yours now.
- Credit counseling. If you’re struggling with debt or need help managing your finances, many non-profit organizations offer free or low-cost credit counseling to get you back on track. While credit counseling services won’t provide you with money directly, they can provide expert financial advice and direct you to other resources that may be able to help.
Pros and Cons of SoFi
SoFi charges no origination fees, prepayment penalties, or late fees (but missed payments will continue to accrue interest)
Offers an unemployment protection program, which will put your loans into forbearance and provide you with job search resources if you lose employment
Can check your rate without a hard credit inquiry
0.25% AutoPay discount available. Potential member rate discount available if you have multiple SoFi financial products
Can add a co-borrower
Offers a mobile app for convenience
Can change the monthly payment due date
Not available to residents of Mississippi
Must be employed, have an offer of employment beginning within 90 days, or have sufficient income from another source to qualify for a loan
Must have a credit score of 680 or higher to qualify for a loan
Minimum loan amount is $5,000 (may be higher in certain states)
Does not offer same-day funding; applications typically take between 2-15 days to process, and funds are generally available within a few business days
SoFi Compared to Other Lenders
|SoFi||LightStream||Marcus by Goldman Sachs|
|Current APR||4.99% to 19.53% (with AutoPay discount)||2.49% to 19.99% (with AutoPay discount)||6.99% to 19.99% (0.25% AutoPay discount available)|
|Loan Term Range||2 to 7 years||2 to 7 years||3 to 6 years|
|Loan Amount||$5,000 to $100,000||$5,000 to $100,000||$3,500 to $40,000|
|Credit Score Needed||680||Not specified||Not specified|
|Unsecured or Secured Debt||Unsecured||Unsecured||Unsecured|
The above rates and loan information is accurate as of November 1, 2021. The NextAdvisor editorial team updates this information regularly, though it is possible APRs and other information has changed since it was last updated. Also, some loan offerings may be specific to where you live.
How to Qualify for a SoFi Loan
To qualify for a personal loan, you need to be a U.S. citizen, permanent resident, or visa holder, age 18 or older. SoFi loans are not available to residents of Mississippi.
You’ll also need a credit score of at least 680 (which is considered by Experian to be in the “good” range) to qualify for a loan. Keep in mind that even if you meet the minimum score requirements, having a lower score will likely mean getting interest rates on the higher end of SoFi’s range.
Aside from credit score requirements, SoFi also requires you to be currently employed, have an offer of employment that starts within 90 days, or have an alternate source of sufficient income. There’s no minimum income requirement specified, although monthly income and expenses will be considered when evaluating your loan application. Other factors that SoFi may look at when determining your loan eligibility include your financial history and professional experience.
If your credit history is less-than-stellar, SoFi allows a co-borrower (which is different from a cosigner) to a loan, which could increase your chances of qualifying for a loan or getting a better rate if your co-borrower has better credit than you. However, adding a co-borrower to a loan has its own risks and should only be done after careful consideration of the pros and cons.
If you have one or more existing SoFi personal loans and want to take out another one, you’ll need to have made at least three on-time payments on your existing loans in order to qualify for a new one. Michigan residents may only have one SoFi loan at any given time.
Who Should Get a SoFi Loan
SoFi personal loans can be used for:
- Personal, family, and household purposes
They can’t be used for:
- Real estate (SoFi offers home loans instead)
- Post-secondary education (SoFi offers private student loans and student loan refinancing instead)
Some common reasons for taking out a personal loan include:
- Financing large expenses (such as an expensive purchase or home improvements)
- Consolidating debt
- Paying for unexpected expenses (such as medical bills or repairs to your home or car)
Because of SoFi’s relatively strict credit score and income requirements, SoFi loans are best for those who already have a solid credit history, stable income, and can wait a few days for their loans to be funded. SoFi loans are probably not the best source of emergency funds. For example, if you’ve recently lost your source of income, you may be better off finding a lender with looser income requirements and same-day funding.
If you have an existing SoFi loan or use SoFi’s investment or banking platforms, using SoFi again will provide you the convenience of your finances all in one place. You may also be eligible for a member rate discount. However, be sure to compare rates and fees from multiple lenders to make sure you’re actually getting the best deal.
How to Apply for a SoFi Loan
1. Figure out your desired loan amount and terms
Before you take out a loan, decide how much you want to borrow and the timeframe you would like to pay it back. With the same loan amount, a longer loan term will mean smaller monthly payments, but you’ll pay more in interest over the life of the loan. Different lenders may have different options for loan amounts and loan terms. SoFi offers loan amounts ranging from $5,000 to $100,000 and loan terms ranging from 2 to 7 years.
2. Check your rate online
You can check your rate by filling out an online form on SoFi’s website. Since this isn’t a formal application, it doesn’t require a hard credit inquiry and won’t affect your credit score. We recommend shopping around and getting quotes from multiple lenders to find the best rate.
SoFi offers a 0.25% rate discount if you enroll in AutoPay, which will automatically withdraw money from your bank account to pay your bill each month.
3. Submit your application
After you check your rate, you’ll need to fill out a formal application. Most lenders will require you to provide documentation like a photo ID, proof of address, and proof of income. This is also the stage where lenders will perform a hard credit check, which may lower your credit score a few points. If you would like to add a co-borrower to your application, you may do so at this stage.
4. Wait for your loan to be approved, signed, and funded
The average processing time for SoFi personal loan applications is 2-4 days. If you’re self-employed or have other forms of complex income, or you have a co-borrower on your application, the process may take longer, up to 15 days. After your application is approved and the final documents signed, you’ll typically receive your funds within a few business days.
Is SoFi good for personal loans?
SoFi offers personal loans with competitive interest rates, no fees, and membership perks like an unemployment protection program and member discounts. SoFi offers more benefits than many other lenders, but it comes with a catch — you need a credit score of at least 680, as well as stable employment, to qualify for a loan. But for those that do meet the qualifications, SoFi is a good lender to consider.
What credit score do you need for a SoFi loan?
You need a minimum credit score of 680 to qualify for a SoFi loan. Keep in mind that you’ll need a higher credit score than the minimum to qualify for the best rates.
Can I get a SoFi personal loan with bad credit?
Does a SoFi loan hurt your credit?
Applying for any loan requires a hard credit inquiry, which can stay on your credit report for one to two years and may lower your credit score by a few points. Once you’ve taken out a loan, any missed or late payments will damage your credit score significantly, so make sure to pay on time and in full.