SoFi Debt Consolidation Review
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SoFi offers one of the most competitive debt consolidation loans on the market, with a relatively low rate designed for those with better credit scores.
8/10
Cost
8.5/10
Features
9/10
Ease of use
8/10
Services
8.5/10
Avoiding debt is sage advice, but if the pandemic taught us anything, it's that there’s no way to predict the future, especially regarding your finances. If you’re among millions of Americans with credit card, loan, or medical bill balances, a debt consolidation loan may be worth exploring.
SoFi, one of the top names in the loan industry, offers personal loans to help you consolidate your existing debts into one monthly payment. Why would you want to? Personal loans tend to have much lower interest rates than credit cards — and consolidating your debt into a personal loan could save you hundreds to thousands in interest charges.
Of course, debt consolidation isn’t right for everyone. I’ll run you through SoFi, explain how their debt consolidation works, look at some of their features, and compare competitors to help you decide if a SoFi debt consolidation road is the best choice for your finances.
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What is SoFi
SoFi was founded in 2011 by a group of Stanford Business School students. Its first offering — student loan refinancing — became the first option to refinance private and federal student loans. 2014, SoFi expanded into mortgage lending, then branched out into personal lending in 2015. Today, the online lender also offers banking and investing services.
The company aims to help people realize their financial independence. In addition to lending, Sofi's website has many financial tools, including various loan calculators.
Use Quicken Loans to Get a Personal Loan
- If you're tight on cash right now, you may want to consider getting a personal loan. A personal loan is a loan that you can use for just about any purpose like: paying off other debt, renovating your home, or family needs like a wedding or adoption.
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How Does SoFi debt consolidation loan work?
SoFi has a student loan refinancing option you can explore if you want to consolidate student loans. But if you’re looking to combine high-interest debt onto one loan — or even roll one debt account into a lower-interest option — you’ll want to apply for a personal SoFi loan.
SoFi's personal loan offers an interest rate of 8.99% APR to 29.49% APR (with all discounts) on loans ranging between $5,000 and $100,000.
You can apply for a SoFi personal loan for credit card consolidation, home improvement projects, IVF, emergency expenses, and other approved loan purposes. SoFi also lets you find out your rate in 60 seconds — without hurting your credit score to compare rates between other debt consolidation lenders.
When you’re ready to apply, you’ll get pre-qualified and view your rate. Getting pre-qualified allows you to see if you will be approved, but it doesn’t guarantee approval.
From there, you’ll be prompted to select the loan terms (length and repayment terms) that work for you and officially apply.
If the loan agreement is signed and approved, you can get your money the same day by connecting your bank account.
Use Quicken Loans to Get a Personal Loan
- If you're tight on cash right now, you may want to consider getting a personal loan. A personal loan is a loan that you can use for just about any purpose like: paying off other debt, renovating your home, or family needs like a wedding or adoption.
- TrustPilot Rating 4.6 out of 5
- Connect with lenders for $0
- 100% online experience.
SoFi debt consolidation loan features
SoFi debt consolidation loans have several features worth considering. Using credit card debt consolidation loans, applicants can find annual percentage rates (APR) as low as 8.99%. Borrowers can apply for personal loans ranging from $5,000 to $100,000.
Related: Best Balance Transfer Cards
Instant prequalification
You can find out if you’ll likely be approved and view your rate without hurting your credit score. Traditionally, you must apply and have a hard credit check run to get approved for a loan. SoFi’s prequalification lets you know instantly if your chances of approval are high, so you don’t risk damaging your credit report.
There is no minimum credit score required to secure a personal loan.
Flexible loan terms
SoFi offers debt consolidation loans with three to seven-year terms, so you can pick the monthly payment that best fits your budget. Just be aware that the longer the loan term, the more interest you’ll pay.
High loan funding
Those who need to consolidate high amounts of debt may find what they’re looking for with SoFi. It offers between $5,000 to $100,000 in personal loan financing, which is high for personal loans.
Relatively low fixed rates
You can lock in a rate between 8.99% and 29.49%, which may be high, but it's not as high as many credit cards charge. This means you might save on interest even if you don’t qualify for the lowest rate.
Applicants who have a co-borrower may be able to secure a more favorable interest rate.
Same-day financing
SoFi may be a good option if you need your money fast because they offer same-day financing (when applicable). In fact, SoFi notes that 82% of personal loans between January 2022 and January 2023 opened on a business day were funded the same day (excluding Direct Pay personal loans and personal loan refinances).
There are no application fees, no origination fees, and no pre-payment penalties.
Cosigned loan options
You can add a borrower to your loan application with SoFi. This may be helpful if you have a low credit score, are worried about getting approved, or want to add a borrower with a strong credit history to lock in a lower rate. Not all personal loans offer this option.
Pay lenders directly
Using SoFi's Direct Pay option will pay your lenders upfront and give you a 0.25% APR discount. Borrowers can also select a fixed payment schedule to keep payments on track and set a target payoff date.
Who is SoFi debt consolidation loan best for?
Not everyone will benefit from the perks of a SoFi debt consolidation loan, but here’s who should consider one.
Anyone with high-interest credit card debt. If you have credit card debt with interest rates in the mid-to-high 20%, applying for a SoFi loan could help you save on interest charges. I recommend at least prequalifying first to see what rate you’ll likely be approved for before moving on. Compare this to Sofi's best rates to make the right financial decision.
Those struggling to make monthly payments. Since SoFi offers loan terms as long as seven years if you’re struggling to repay your credit card or other debt balances, extending your payment time frame might help. Sure, you may end up paying a bit more in interest — but if you can’t afford your payments now, you may actually end up saving yourself some money while not destroying your credit score.
Borrowers with too many debt accounts to keep track of. Even if you can afford your monthly debt payments, if keeping track of them all is a painful process, consolidating everything into one monthly payment might help. This could also save you in interest but will allow you to only worry about paying your debt off once a month, from one spot.
Who shouldn’t use SoFi debt consolidation loan?
Anyone who can pay off their debt in a few months. Applying for a debt consolidation loan through SoFi may not make sense if you plan to repay your debt. If you can afford to pay off your balances in the next few months, it’s likely best not to transfer your debt.
Those with good to excellent credit. If you have a credit score that’s above 700, you may be able to lock in an even lower personal loan rate through other lenders, including local credit unions. SoFi’s rates are relatively low, but if you have good credit, it’s worth shopping around.
Anyone looking to borrow a small amount. SoFi’s minimum of $5,000 may be too high for borrowing with a couple hundred or a thousand in credit card debt.
Use Quicken Loans to Get a Personal Loan
- If you're tight on cash right now, you may want to consider getting a personal loan. A personal loan is a loan that you can use for just about any purpose like: paying off other debt, renovating your home, or family needs like a wedding or adoption.
- TrustPilot Rating 4.6 out of 5
- Connect with lenders for $0
- 100% online experience.
SoFi debt consolidation loan pros and cons
Pros
- No fees
- Same-day funding
- Online instant prequalification
- Flexible loan terms
- Competitive interest rates
- Easy application process
- Can apply with a cosigner
Cons
- Not the lowest rates available
- High minimum loan amount
- No secured loan options
SoFi debt consolidation loan vs. competitors
Loan provider | Loan amount | APR | Fees |
|---|---|---|---|
SoFi | $5,000 to $100,000 | 8.99% to 29.49% | None |
LightStream | $5,000 to $100,000 | 7.49% to 25.49% | None |
Best Egg | $2,000 to $50,000 | 8.99% to 35.99% | 0.99% to 8.99% origination fee |
LightStream
LightStream is another personal loan provider you might consider when looking into SoFi. Lightstream offers some of the lowest rates around — as low as 7.49%. It offers similar borrowing limits (between $5,000 and $100,000) as SoFi and the same loan terms (2 to 7 years).
Credit score requirements are fairly similar, though Lightstream may be a little easier to qualify for. You may also receive same-day loan funding, and LightStream offers a 0.50% auto-pay discount.
Best Egg
Another option worth considering is Best Egg. This loan provider offers debt consolidation loans of $2,000 to $50,000. Its rates start at 8.99%, and it charges origination fees. Credit requirements are the same, but loan terms extend to only five years.
Best Egg loan funds are available within one to three business days, compared to same-day funding from SoFi. In addition, Best Egg loans are unavailable in Iowa, Vermont, West Virginia, and Washington, D.C.
You can learn more about Best Egg here.
FAQs
What are the risks of debt consolidation?
Applying for a debt consolidation loan means taking on new debt, which is always risky. You’ll need to ensure you pay your monthly balance in full each month, otherwise, you could incur late fees and additional interest charges. Your credit score could also suffer from late payments. If you’re moving credit card debt onto a debt consolidation loan, there’s also the risk that you may continue racking up new credit card debt, on top of your loan balance. Be mindful to pay your credit cards in full if you continue to use them after moving your debt.
When does it make sense to consolidate debt?
If you’re struggling to afford your monthly debt payments, can’t keep track of all of your debt accounts, or want to see if you can lock in a lower interest rate, then consolidating your debt might make sense. May personal loans have lower interest rates than credit cards, which means you could save more in interest charges in the long run.
What should I consider before getting a debt consolidation loan?
First, I recommend reviewing your budget to find out how quickly you can pay down your existing debt. If you’re able to do so in a few months, it may not make sense to take out a loan. If it will take longer, shop around for lenders and check for prequalification to compare rates without impacting your credit score. This can help you find the right debt consolidation loan for your financial situation.
Can I consolidate debt without hurting my credit?
To minimize damage to your credit report, look for debt consolidation loans with prequalification options. Once you find a rate you’re happy with, understand that applying may reduce your credit score slightly due to the hard check. From there, taking on a new balance may also temporarily increase your debt utilization rate — which could drop your score. But once you use the loan funds to pay down your credit cards and demonstrate a pattern of on-time loan payments, your credit score should improve.
Use Quicken Loans to Get a Personal Loan
- If you're tight on cash right now, you may want to consider getting a personal loan. A personal loan is a loan that you can use for just about any purpose like: paying off other debt, renovating your home, or family needs like a wedding or adoption.
- TrustPilot Rating 4.6 out of 5
- Connect with lenders for $0
- 100% online experience.
The bottom line
SoFi offers one of the market's most competitive debt consolidation loans, with a relatively low rate designed for those with better credit scores. It also offers discounts, same-day funding, and flexible loan terms, giving you more control over the loan you select.
That said, if you’re in credit card debt and need to lock in a lower interest rate, I recommend checking out SoFi’s prequalification online. This will help you decide if you’ll save money by consolidating your debt with SoFi — or if you’re better off looking elsewhere.
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Writer
Courtney Johnston is a freelance writer, specializing in finance, travel, and health. She has written for The Chicago Tribune, Benzinga, BestReviews, Mashvisor, Fundera, MoneyGeek, and The Culture Trip. She also teaches writing instruction at the University of Indianapolis. Courtney currently resides in Indianapolis.
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