As our financial lives continue a noticeable shift to virtual business, SoFi has positioned itself as an option in an increasing number of online personal financial services.
SoFi offers a variety of lending options like student loans, home mortgages and personal loans, as well as money management and investment tools. It is marketing itself as a one-stop financial shop on your phone.
It even offers no-cost membership perks like career services and financial planning advice.
Team Clark decided to see what all the fuss was about get some more insight on the platform. For the purposes for this review, I downloaded SoFi and signed up as a new user. I wasn’t in need of any personal financial services at this time, so instead I poked around to see what the user experience is like. I also spoke with members of Team Clark who have had more extensive experience with the service.
Table of Contents
- What Is SoFi?
- How Does SoFi Work?
- What Services Can I Get With SoFi?
- What Users Are Saying About SoFi
- Final Thoughts
What Is SoFi?
SoFi, which is short for Social Finance, Inc., is an online personal finance company that offers a variety of financial services through its app and website.
The types of financial services offered by the California-based company include student loans, home mortgages, and personal loans, as well as investing and banking options. It also offers special perks to members, including regional events and discounts on future lending opportunities.
How Does SoFi Work?
Your first step is to sign up for a user account with SoFi to become a member.
Membership does not cost you anything and the initial signup process requires no more than your name and a valid email address. Once logged in with your membership, you will have access to browse and apply for each of the SoFi services (we’ll run through many of them in a little more detail later in the article).
Remember, you get to pick and choose what you use from the products that are offered under the SoFi umbrella. That means you only have to provide personal information that is necessary for each product. For instance, a student loan may require different documentation than a home loan, so you’re only going to be asked to provide the pertinent information for the one for which you apply.
Since there is not a physical presence, communication with SoFi staff is done electronically through the app, website and email.
Once you are signed up as a member with SoFi, you have access to a menu of benefits that you may not typically expect from a company trying to make money on your financial decisions. SoFi has been known to host regional events like cooking classes or a night at a fancy restaurant that are exclusively offered to members.
Here’s a quick rundown of some of the membership perks:
- Access to financial planning advice through credentialed advisors
- Member rate discounts (save on your interest rate if you sign up for an additional loan through SoFi)
- Referral bonus program
- Personalized career advice
- Ticketed member events like cooking classes, themed parties and topic-specific speaking events and webinars
While many of these offerings are free of charge, some are ticketed events, so make sure to look over the event you’re interested in to see if there is a “ticket” price before signing up.
Some events that are free to members do still have a penalty fee if you sign up to participate and then don’t show up for the actual event. For example, here is the fine print on a virtual cooking class that I went through the signup process for:
You can gain a better understanding of the full membership benefit menu here.
What Services Can I Get With SoFi?
SoFi has a wide variety of financial services available. So while we cannot hit all the details on every offering, here’s an overview of some of the more popular categories.
I shied away from focusing much on SoFi’s interest rates since they can change frequently. Plus, the rate you qualify for is likely to vary from person-to-person based on a credit evaluation. Many of the offers featured do seem attractive and could definitely be considered competitive in the marketplace.
Student Loan Services
SoFi offers student loan solutions for pretty much every situation: offerings for new student loans, people looking to refinance their student debt and even student loan options for parents.
New Private Undergraduate and Graduate Loans
For those entering college or are already enrolled, SoFi has a private student loan program. You can apply for both undergraduate and graduate loans, though the rates are higher on the latter. That’s to be expected in the student loan industry. SoFi offers both fixed and variable rate loans, allows for adding cosigners during the online application process and touts that the loans will cover 100% of the cost of attendance.
For undergraduate loans, SoFi will allow you to repay via one of four methods: deferred (make first payment six months after graduation), interest-only (pay only interest while in school), partial ($25/month fixed payment while in school) or immediate (start paying right away).
Refinancing Student Loans
SoFi will refinance both federal and privately funded student loans. There are no application or origination fees involved, and these refinanced loans have no prepayment penalties. It appears that you can receive a quote on your potential interest rate without enduring a credit check.
You can review the eligibility criteria for SoFi’s student loan refinance program here.
Parent Student Loans
If you are a parent who either is paying for or plans to help pay for your child’s higher education experience, SoFi has some options for you as well. These privately funded loans allow for a fixed or variable rate of borrowing on a child’s tuition.
The repayment method on these loans is limited to either immediate (pay regular payments as your child progresses through school) or interest-only (pay only the interest on your loan for your child’s tuition until education is complete).
You may not think of a phone app like SoFi as a mortgage lender, but they actually do have the capability to help you purchase your next house or refinance the one you already have.
The mortgage offerings require as little as a 10% down payment and can be for as much as $3 million.
SoFi says it can quote you a home loan interest rate in as little as two minutes without impacting your credit score by using a “soft credit pull,” so you should be able to get an idea of how competitive they are with rates you’re seeing elsewhere before applying. However, do note that they will have to pull a full credit report (which impacts your credit report) if you decide to move forward with the application process.
Other mortgage perks touted are SoFi’s ability to “typically” close loans within 30 days and a $500 discount on processing fees for members.
As always, Team Clark recommends that you get several mortgage quotes before making any decision on a purchase or refinance. For most people, this is the largest debt obligation of your life and being sure you’re making the right choice is of the utmost importance.
If you’re looking to make a major purchase or pay off some outstanding debts with a potentially lower rate of interest, SoFi’s personal loans may be an option worth considering.
SoFi will issue personal loans for between $5,000 and $100,000 with no origination fees or prepayment penalties.
As you apply for this type of loan, SoFi is going to assess things like the purpose of the loan, your desired amount and capacity for a monthly payment.
You can get some guidance from Team Clark on personal loans here.
SoFi Money is a “cash management” product that gives SoFi offers to members on a fee-free platform. It is free to sign up and has no minimum balance requirement.
While the program does offer many bank-like options, it’s important to note that you are not signing up for an online checking or savings account. Instead, you are signing up for what amounts to a FDIC-insured brokerage account.
Some of the functions you’re able to execute with an account like this include:
- Debit card spending
- No-cost ATM access
- Automated bill pay
- Free person-to-person cash transfers
- Earn interest on balance (SoFi was offering 0.2% APY at the time this article was published)
If you’re looking for an online bank, Team Clark has you covered with a look at the top options in that area.
In addition to its loan and money management elements, SoFi has tools for making investments.
There is no fee for trading traditional stocks and ETFs and the service even allows you to invest in “stock bits” in increments as little as $1. That’s basically buying a share of an expensive stock. For example, at the time this article was published Amazon’s stock was trading for roughly $2,400 per share. “Bit” or “fractional” investing would allow you to purchase as little as 1/2400 of a share of Amazon for $1. Here’s a list of stocks eligible for this type of investing with SoFi.
SoFi also allows you to invest in cryptocurrencies like Bitcoin.
The SoFi Relay platform is also offered free of charge and is all about monitoring your financial well-being. You can access things like a free credit health tracker as well as a host of tools for your personal budget.
It’s important to note that you’ll have to link personal banking information to the SoFi platform in order to enable things like analysis of your spending trends. Team Clark has reviewed services like Digit and TrueBill that also monitor your spending habits and may potentially offer more benefits by automatically saving money or trimming the cost of your monthly bills.
What Users Are Saying About SoFi
While I don’t have any first-hand experience with a SoFi transaction, I was able to seek the counsel of someone who has done business with them. Team Clark’s Beth has a close family member who used SoFi for a personal loan. Her family member had this to say about the experience:
“The process was mostly online and via email. I have auto-payments set up and we feel there are good terms on the loan. The site is easy to use and the process was quick once the verification was done. I talked to someone on the phone when I wanted to access customer service, but otherwise I didn’t have to talk to anyone from So-Fi.”
That generally positive outlook on the services rendered by SoFi extends to the Better Business Bureau, which has issued SoFi an “A-” rating. That’s a score between 90 and 93.99 on its 100-point grading scale.
The SoFi app has a 4.8 out of 5 star rating on the Apple App store with more than 32,000 reviews. The Google Play Store rating is slightly lower at 4.1 out of 5 after more than 3,000 reviews.
SoFi definitely offers a fresh alternative to many of the traditional outlets for your personal financial needs. As things like “social distancing” become a regular part of our society, having the ability to access so many financial options right from your cell phone is a plus.
Based on my test drive of the SoFi interface, I think you’ll find that it’s pretty easy to navigate. What I can’t predict is how your rates will turn out when getting quotes for their services, so I’d caution against simply accepting their terms because of the convenience. Use this as just one of many tools in your financial life.
Bottom Line: If you are looking for a one-stop-shop for financial services and are comfortable completing major transactions without much human interaction, you may find that SoFi is a good fit for your personal financial situation. As always, Team Clark recommends that you shop around among companies to ensure that you’re receiving the best deal on each transaction that you make. After all, what’s easiest isn’t always what’s best in the long run.