SoFi started in 2011 and is a lending company that recently surpassed $60B in funded loans as of 2021. They have 500,000+ customers and have raised $2.4B in equity funding so far. This is my SoFI lending review.
The company was founded by Mike Cagney, Dan Macklin, James Finnigan and Ian Brady, four students who met at the Stanford Graduate School of Business. They got together because they wanted to make lending and refinancing easier for borrowers using social lending.
The gist of their business is that lenders are willing to lend at a lower rate to people similar to themselves versus complete strangers. In other words, alumni should be more willing to lend to students and fellow grads of their alma matter because they share the same educational qualifications and should have a strong likelihood of repaying their loans.
SoFi’s $2M pilot loan program, not surprisingly, took place at Stanford GSB where the median starting salary is roughly $120,000 upon graduation. Forty alumni invested an average of $50,000 on 100 students. So far, the pilot program has not had a single default. Does anyone really want to be the alumnus who defaults on a loan from a more senior alumnus?
SoFi is considered the largest and most successful fintech lender today. They are based right here in San Francisco, and I’ve met many of their employees. It’s worth checking to see if you can get a lower student loan rate with SoFi. The cost is free.
SoFi Lending Review: Funding History – $2+ Billion
Latest fund raise was a $500M Series F round in February, 2017 led by Silver Lake. SoFi is looking to go public through a SPAC. But SPACs have died down.
Social Aspect To Lending
What I found most intriguing about SoFi’s student loan refinance program is that it has this great unemployment benefit clause where it will pause your debt repayment schedule if you lose your job. Interest will still accrue while you are looking for work, but at least you’re saving some cash flow when you need it most. Now that’s some pretty good unemployment insurance!
SoFi also offers other benefits that traditional lenders don’t. For example, career advising, networking events (which I’ve attended), and entrepreneurial support to help borrowers achieve financial and professional success. To date, SoFi has helped about 70 SoFi members secure new jobs through its Job Search. Another 30 have gone through their Entrepreneur Program. Participants from SoFi’s first two classes boast two acquisitions, one merger and several rounds of multi-million dollar funding.
What I really like about SoFi is that their underwriting process takes into account merit, education, and quality of employment history, in addition to the traditional income, credit score, and existing debt levels assessed by traditional banks. I firmly believe that if I went through SoFi’s mortgage refinance process back in early 2015 when the 10-year yield was at 1.68%, my refi would have passed.
SoFi Lending Review: Two Main Products
* Fixed rates as low as 3.375% variable rates as low as 2.345% with auto pay
* Zero origination/prepayment fees
* Offer terms from 5, 10, 15, 20 in both fixed and variable
* Can refinance both private and public student loans.
* Offers Unemployment Benefits
You can apply to refinance a student loan here.
* Fixed interest rates start at 5.70% APR and variable rates start at 4.77% APR (with autopay)
* Can lend up to $100K
* No origination/prepayment fees
* Unemployment benefits
You can apply to consolidate your high interest rate loans here.
SoFi also sells life insurance. But, I recommend you utilize Policygenius. They are an insurance marketplace that lets you compare rates from the nation’s top insurers for free.
SoFi Loan Application Snapshots
Here are a few snapshots to show you what the application process looks like for borrowers on SoFi.
Step 1 of populating your Profile is basic personal information:
Step 2 is where you enter your education information including your graduation date:
Next is typical employment information including your current employment status and salary:
And here’s a snapshot of what the application form looks like for their mortgage products:
It’s all very straightforward and doesn’t take that long to complete.
SoFi Lending Review: Take Advantage Lower Rates
There is an absolute gold rush of venture capital funding going into the financial technology space. Due to a massive amount of capital, companies like SoFi can lend at lower rates to the benefit of the borrower. Everybody who has a student loan or high interest personal loan should get a quote from SoFi to see if you can refinance your existing rates.
SoFi is one of the most successful fintech lending company today with the largest amount of funding. Take advantage of the boom by lowering your interest rate today.
For a great alternative to SoFi, check out Credible for personal loans and mortgages. Credible has a great marketplace of pre-vetted lenders looking to help you save money today. I’ve used Credible to check the latest mortgage rates for refinancing and purchase loans.
About the Author:
Sam began investing his own money ever since he opened an online brokerage account in 1995. Sam loved investing so much that he decided to make a career out of investing by spending the next 13 years after college working at two of the leading financial service firms in the world. During this time, Sam received his MBA from UC Berkeley with a focus on finance and real estate. In 2012, Sam was able to retire at the age of 34 largely due to his investments that now generate roughly $265,000 a year in passive income. He spends time playing tennis, hanging out with family, consulting for leading fintech companies and writing online to help others achieve financial freedom.
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