How the SoFi Debt Consolidation Program Works
8 MIN READ
Published October 27, 2023 | Updated November 20, 2023
If you’re among the millions of Americans with personal loans, medical debt, and credit card balances, a debt consolidation loan may be an option worth exploring. Debt consolidation can help you consolidate multiple debts into a single, affordable monthly payment.
The SoFi debt consolidation program is geared towards borrowers with credit card debt. Americans have a total credit card debt of $1 trillion in 2023. It’s easy to see how debt can quickly creed up if you don’t take care of it at the earliest.
SoFi offers personal loans at competitive rates that can be used to consolidate credit card debt. However, it is important to review the terms they offer and their interest rates and learn more about how the program works before deciding if it’s the right choice.
What Is the Sofi Debt Consolidation Program?
The SoFi debt consolidation program involves getting a personal loan from the company. SoFi will offer you a lump sum, which you can use to pay off your credit cards. These are unsecured loans that don’t require collateral.
SoFi can also pay your lender directly, so you don’t have to. If you choose this option, you can also receive a 0.25% discount on your interest rate. Loan amounts range from $5,000 to $100,000. The debt consolidation loans do not come with origination, late, or annual fees.
How Does Debt Consolidation Work at SoFi?
Debt consolidation allows you to combine multiple high-interest debts into a single loan. Once you replace your existing debts with a new loan, you’ll have a single monthly payment. You can prequalify for the personal loan online in as little as one minute.
Prequalifying for a personal loan involves a soft credit check, so it won’t hurt your credit score. This will allow you to find out the interest rate you qualify for. Once you submit a formal loan application, SoFi will do a hard credit check, which may lower your credit score temporarily.
Interest Rates and Application Fees
The SoFi debt consolidation program can replace your high-interest debts with a personal loan with an APR range of 8.99% to 25.81%, with autopay and direct deposit discounts combined, as listed on their website. These are fixed interest rates, so your monthly payment will remain the same over the life of the loan. There are no fees for prequalifying for the loan.
SoFi also doesn’t charge any prepayment penalties, late fees, or origination fees on the loan. It’s a fixed-rate loan, so repayments are easy with a target payoff date. If you choose Autopay, you can receive an interest rate reduction of 0.25%. You may also receive an additional interest rate reduction of 0.25% if you choose to set up direct deposit.
What Are the Benefits?
Consolidating your debts with SoFi’s debt consolidation program has a number of benefits, as listed below:
- No origination fees, late payment fees, or prepayment penalties
- Lower interest rates compared to many competitors
- Can apply for the loan with a co-signer
- Instant prequalification
- Same-day funding
What Are the Drawbacks?
While SoFi offers several perks to borrowers, such as no fees and easy prequalification, there are also a few drawbacks to signing up for the program:
- No option for a secured loan
- The minimum loan amount may be high for some borrowers
- You may be able to qualify for lower loan rates elsewhere if you have excellent credit
Reviews of Sofi Debt Consolidation Program
SoFi is a well-known name in the loan industry and generally has good customer reviews. It has an overall score of 4.7 stars on Trustpilot and an A+ rating on the Better Business Bureau. However, the company is not BBB-accredited.
Most borrowers like the speed of funding and easy application process. Negative reviews highlight dissatisfaction with customer service and the qualification requirements, which can be too stringent for some borrowers.
Teresa Dodson, debt expert and founder of Greenbacks Consulting, believes a SoFi loan can be an effective choice for consumers. “If you can consolidate your debts into a Sofi loan for a lower interest rate, this option makes sense,” Dodson says.
Are You Eligible for the SoFi Debt Consolidation Program?
SoFi’s eligibility criteria state that you must be a visa holder, permanent resident, or U.S. citizen to qualify for the personal loan. You should also be considered an adult according to the laws in your state. You must also be employed and have sufficient income to qualify.
You’ll require a credit score of 680 or more to qualify for SoFi debt consolidation program, so only borrowers with good credit may qualify. You may qualify for better rates if you have a higher credit score. If your credit score is low, you can also apply with a co-borrower, but they must reside at your address. Another option is to apply for a personal loan for bad credit with another lender.
Income and Debt-to-Income Ratio
You’ll also need to have an annual income of $45,000 or more to qualify. The lender may also evaluate your debt-to-income (DTI) ratio, which measures your income against your debt obligations. You may qualify if you have enough cash flow and a DTI of 30% or less.
How To Apply
Applying for the SoFi debt consolidation program is fairly straightforward, easy, and quick, based on our assessment of their website. The process can be stress-free if you’re prepared with the right documents.
You can prequalify for the Sofi debt consolidation loan online, and the process takes only a minute, as we determined by reviewing their application. However, it’s best to check your credit report before applying to determine if you’ll qualify for the loan. Review your budget to see if you’ll be able to afford the monthly payments before you borrow.
You’ll also need to gather some documents for the application, such as a valid ID, Social Security Number, proof of address and income. Having these documents on hand can speed up the process.
The Application Process
Once you have the necessary documents on hand, here’s the process you’ll have to follow to apply for the loan:
- Visit the SoFi mobile app or website to prequalify for the loan and find out what APR you qualify for.
- Complete the loan application online if you’re happy with the repayment terms of the new loan.
- If you have any questions, ask a loan consultant for clarification. SoFi will then do a hard credit pull for your loan application.
- Once you submit the application, it takes two to four days to receive approval.
- Review the loan agreement and sign it.
- You’ll typically receive same-day funding, but it may take longer for larger loan amounts.
What Are the Alternatives?
If you don’t qualify for the SoFi debt consolidation program or would like to explore alternatives, here are two other competitors to consider. You can also check with credit unions, which may offer better rates, or consider alternatives like line of credit or home equity loans.
LightStream is a personal loan provider offering $5,000 to $100,000 loans. The company offers interest rates starting from 6.99%, lower than SoFi's. Loan terms for the loan are two to seven years. If your application is approved, you may receive same-day funding.
Best Egg is another option worth considering. The company offers debt consolidation loans starting at 8.99%. Borrowing limits are $2,000 to $50,000; the maximum loan term is five years. Credit requirements are similar to SoFi, and funding is available within three business days.
Is Sofi Debt Consolidation Right for You?
While SoFi debt consolidation loans offer a good option for paying off high-interest credit card debt, they may not be right for everyone. These loans are right for borrowers with multiple high-interest credit cards, but only if you qualify for a low interest rate at SoFi. If not, consider alternatives like balance transfer credit cards.
The loan term is up to seven years, so if you’re struggling to repay your debt balances and choose a longer term, you may end up paying more in interest over the life of the loan. You may not qualify for the loan if you have bad credit or a higher debt-to-income (DTI) ratio. It may be best to compare multiple personal loan lenders and at least three loan offers to evaluate the lowest rates for your financial situation.