What Is Sofi?
Sofi is a modernized finance company for the 21st century. The site, headquartered in San Francisco and founded in 2011, seeks to bring a holistic approach to personal finance.
Rather than specializing in one aspect of money management, Sofi’s mission is to help clients master all aspects of their financial picture. The company “works to empower” its members.
This empowerment is offered in the form of lending products as well as digital online content designed to educate.
Sofi explains, “we’re all about helping our members get ahead and find success.” Yet, how does this broad statement answer the question, “What is Sofi?”The answer is best seen by breaking down the different aspect of the startup. This illustrates Sofi’s competitive advantages and value-added services. Sofi is an entity consisting of five parts:
- Capital lender
- Investment management company
- Business development and consulting
- Career development
- Personal finance education
In this article and Sofi review, we’ll explore these five aspects, focusing primarily on lending, to locate the company’s strengths. We’ll examine Sofi loan reviews and the question, “is Sofi legit?” Through careful review of the Sofi.com reviews posted by users we’ll determine which services are best.
Image source: Sofi
Sofi Loans Review
While the site has many identities, its DNA is rooted in lending. “What is Sofi?” has a simple answer: Sofi is a lender. The other aspects listed above are designed to capitalize on the prospect of a longer-term customer. Sofi loans encompass three major financing needs:
- Student loans
- Personal loans
Like many other online finance companies, Sofi offers competitive rates, speed, and flexibility. Though still a new company, the initial Sofi reviews have been strong. Customer reporting agency ConsumerAdvocate.org shows widely positive reviews. One such Sofi loan review states, “The Sofi rates are competitive. The online process is easy and you can get pre-qualified without impacting your score.” The Sofi machine is built for speed.
Other Sofi reviews have lamented problems with the burgeoning interface. “The customer service agents, who I had to talk to over and over again, admitted that many people have trouble with their online verification system, and there is no alternative.” After nearly five years of operation, there are still logistics to be fine-tuned.
Sofi Reviews: Student Loans
Users can customize their student loan by choosing:
- To refinance an existing student loan
- Set up an MBA loan
- Generate a loan to finance a child’s education
The advantage offered by Sofi student loan refinancing is in their ability to consolidate both federal and private student loans. Their lean structure boasts no origination fees and no payment penalties. This is a refinancing program.
As a result, you’ll be eligible for rates on your student loans that may be lower than what you’ve been paying. The findings of our Sofi loans review supports their low rate reputation. Sofi makes their rates clear with both fixed rate loan options and variable options on a hypothetical $10,00o private loan (single disbursement).
Those interested in this program with Sofi should consider the four criteria for an applicant:
- You must be 18 or older
- You and the co-signer are permanent U.S. residents
- You must be employed or have an offer of employment within next 90 days
- You have graduated from a selection of Title IV accredited universities
Sofi offers student loan refinancing in 49 states.
The MBA loan is more restrictive. Only those enrolled in an MBA program affiliated with Sofi are eligible for financing. Before considering the rates offered with one of these Sofi loans, review the list of approved MBA programs. To date, the list is short. Only 25 schools are connected to Sofi. These institutions represent many of the most elite programs.
What is Sofi really offering with the MBA financing? Essentially, low rates for specific schools. Sofi advertises values like career support, a breezy interface, full deferment, and interest-only plans. Before considering these soft values offered by Sofi, review the rates. This is the only number that matters. Fixed rates are as low as 6.5%, while variable rates start at 4.83%.
Finally, Sofi offers a program called, “The Parent Loan.” This is also a version of a student loan. To be eligible, the applicant must be the parent of a full-time student at an eligible school for the academic year. Your permanent residence must be within a state where Sofi is licensed to lend.
Here, fixed rates can go as low as 4.25% and variable rates start at 2.90%. Sofi reviews each applicant to determine eligibility. Again, Sofi promises no application, origination, or pre-payment fees of any kind. However, take caution that this is an “immediate repayment loan.” As a result, the first payment will be due 30-45 days from the start of funding. These are the considerations to be acknowledged. Before setting off for your Sofi loans, review the fine print.
Examining Sofi loans reviews reveal plenty about the experience. Overall the experience of students has been good. One customer endorsement on community feedback site Quora reads, “I used Sofi to refinance my loans recently and have nothing but positive reviews to give…The online application process was seamless and simple.” Those who take a moment to familiarize themselves with the qualifications in advance will likely have equally strong experiences.
Sofi Reviews: Mortgage Loans
The Sofi loans review for mortgage borrowing indicates this may be their strongest product. Lending business LendingTree reports an average satisfaction rating of 4.5 out of 5 from 46 reviews. The highest ratings come from the categories of “Fees & Closing Costs” and “Customer Service.” Only 5 reviewers gave just 1 star.
Sofi reviews prove the value is in the rates. One customer explains, “I applied for and received a personal loan with a rate lower than even my credit union was offering.” Another homeowner hopeful reports, “This was a great experience. No other lender would come even close to 15% down without mortgage insurance.” Many customers will be pleased with the aggressive rates and permissiveness of the low down payment option.
Some additional benefits include:
- No mortgage insurance (PMI) is needed, even when putting less than 20% down
- Pre-approval can occur in less than 2 minutes without affecting credit scores
- Optimized debt-to-income ratios allow for more robust financing
The fast, inexpensive financing offered will draw more and more people looking at homeownership. Recent figures support this. The Federal Reserve Bank of New York produced a 2015 quarterly report on borrowing for homes. The findings: “Mortgage originations increased to $502 billion, the fifth consecutive increase after a 14-year low in the second quarter of 2014.” A Sofi loans review shows their intent is clearly to capitalize on this recovering market.
What is Sofi offering to widen their customer net? They promote flexibility. Down payments, in some cases, can be as low as 10%. Interest-only loans are available. Mortgage refinancing is also offered. Before opening an application for Sofi loans, review the list of eligible states. Sofi is licensed to issue mortgages in 27 states.
Sofi Reviews: Personal Loans
Sofi personal loans are designed for those wishing to pay off high interest credit card debt or make a large purchase. Where traditional credit cards may issue APR values ranging from 11-23%, fixed-rate Sofi personal loans are a more competitive 5.95-12.99% (variable: 4.75%-11.35%). Other benefits include:
- No fees
- Borrowing up to $100,000
- Unemployment protection in some cases
- Live customer service 7 days a week
- Max loan term of 7 years
Customer feedback site BestCompany.com generates a 7.7 out of 8.5 score. Sofi loans reviews are strong here as well. Customer testimonials are largely positive: “Loan limits, interest rate and repayment terms are great for an unsecured loan. It took two weeks for the approval.”
Another customer reports, “Their pre-approval process was exceptionally easy and informative.” Sofi reviews prove that the company is up front about fees, competitive with rates and relatively fast for those investing a few minutes of diligence into the eligibility requirements.
Refinancing options offered by Sofi for personal loans are also worth considering for those stuck with a high APR. The site makes no promises about accepting those with a poor credit history.
This may explain how Sofi is able to offer such low rates. They draw from a carefully vetted applicant pool. What is Sofi trying to accomplish with their model? Rewarding financially responsible customers with exemplary customer services, interest rates, and usability.
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Is Sofi Legit?: Investment Management and More
The short answer: yes. However, this doesn’t mean Sofi is the best choice for long-term wealth building. Sofi subscribes to the theory of active management. In return for retaining Sofi services with the management of your finances, they promise “ETF portfolios actively curated by [a] team of experts.” What is Sofi adding here? In reality very little.
Image souce: Pixabay
Esteemed expert Burton Malkiel who wrote the seminal work, A Random Walk Down Wall Street explains, in a Wall Street Journal article that “passive portfolios that held all the stocks in a broad-based market index have substantially outperformed the average active manager since 1980. Therefore, the increase in fees likely represents a deadweight loss for investors.” Active management similar to what Sofi is offering doesn’t outperform a passive strategy over the long-term.
Customers can make these decisions on their own without being subjected to:
- ETFs that may carry high costs (expense ratios)
- A $5 per month fee for each $100,000 invested
- Portfolio rebalancing at Sofi’s discretion
This service feels a bit tacked on. It is outside their core competency of acting as a lender. Many will be wise to ignore this aspect of the interface. Less expensive value can be had elsewhere. Consider ultra low cost index mutual funds instead.
What Is Sofi Business Development?
This is essentially an extended sales pitch. The value here is the same value illustrated in the Sofi loans review above. However, here Sofi is offering to extend lending to employees of companies who opt to “partner” with Sofi.
Personal loans are offered. Additionally, student loans can be set up so regular contributions can be made by employees. Sofi suggests that engaging in these services will act as a catalyst for improved recruitment. The truth is simpler: Sofi can capture more business by partnering with one company rather than partnering with one person.
What Is Sofi Career Development?
These “services” are available only to Sofi members (those who have passed the Sofi loan review process). This is a soft sell designed to round out the suite of options for those willing to take the plunge into Sofi.
This aspect of the business holds little value and receives little to no coverage, as the service is nebulous and not well-defined. The “Entrepreneur Program” is a component of the career development arm. Again, the value here is minimal. What is Sofi offering?
- Mentorship and resources
- Access to investors
- Peer Network
- Six months of loan deferment
These aspects of Sofi.com are vague and lack the measurable value that their loan porducts offer.
What Is Sofi Personal Finance Education?
Here, Sofi reviews ample data across many sources and metrics to provide some surprisingly meaningful infographics. The value here is evident in the low price of $0.00. This is part of their free online content. Savvy customers and non-customers alike will capitalize on this wealth of free information.
Our Sofi.com review indicates that the site has incredible access to data directly from their own customer base. The result: they’re able to generate current, clean, and specific career and financial metrics that aren’t available elsewhere. Here you can glean important truths about lifetime earnings in different fields based on Sofi’s analytics.
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