Payoff vs Prosper vs SoFi: Personal Loan Alternatives & Review - Financial Analyst Insider
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Payoff vs Prosper vs SoFi: Personal Loan Alternatives & Review

As more and more people are looking for alternatives to the traditional lending experience, it is no surprise new online lending platforms are popping up all the time.

The banking industry as a whole is changing rapidly as technology continues advancing, and the lending world is not immune to those changes. 

For a variety of reasons, not the least of which being simply convenience, Americans are increasingly interested in hopping online when they need to borrow money instead of stopping by their local financial institution.

It is to the point now where it can almost be overwhelming to know where to start.

SoFi, Payoff, and Prosper are three popular online lending platforms. Each option offers unique advantages and disadvantages. 

This article reviews the underwriting standards for each lender and compares the available repayment terms, interest rates, and fees to help you evaluate the best option for you.

For more information about personal loans, we recommend you consult our Long Term Personal Loan guide.

Personal Loan Market Statistics

According to Experian, approximately 34.3 million Americans hold a personal loan.  Based on those statistics the average personal loan includes the following attributes:

  • Average personal loan balance: $15,143
  • Average monthly payment: $353
  • Average APR: 9.37%

Keep in mind the statistics above only represent averages.  Your actual quoted APR rate could be higher or lower than the national averages based on your personal credit score and the requested loan tenor.

SoFi

SoFi offers a modern take on personal loans.

By creating an online lending platform rather than a brick and mortar store front, SoFi can pass extra savings to borrowers in the form of a lower interest rate.

SoFi offers unsecured personal loans to finance the following expenses:

  • Credit card consolidation.
  • Home improvements.
  • Relocation assistance.
  • Medical procedures.

Many people use the personal loans to refinance higher interest credit card debt or finance a large one-time expense, like a wedding, vacation, medical expense, or home improvement.

SoFi’s personal loans are unsecured, which means you don’t need to provide collateral, like your home or vehicle, to obtain financing.

Approval Process

SoFi provides a simple online application process that will let you check your interest rate within 2 minutes.  You can check your interest rate and potential loan amount with no requirement to move forward with the loan.

Checking your interest rate does not impact your credit score.  When you check your rate, SoFi completes a soft credit inquiry.

If you decide to move forward with a loan, SoFi will request your full credit score which will show up as a credit inquiry on your credit report.

Notable Benefits

SoFi’s loan approval process considers your personal credit score and debt to income ratio.  However, SoFi also evaluates additional factors like your career and education which can improve your ability to be approved for a loan.

If a SoFi borrower loses their job, SoFi will also temporarily pause your loan payments.

Once you complete an application, your funds will be transferred to your bank account within a few days.

SoFi also offers direct access to customer service representatives who can answer any questions you might have about your personal loan.

Auto Pay Discount

If you setup an automatic monthly payment from a linked bank account, SoFi will provide borrowers with a .25% interest rate deduction.

Eligibility Requirements

SoFi completes a formal underwriting process for all loan approvals.  Your final loan approval is evaluated based on the following criteria:

  • An evaluation of your financial history, credit score, career experience, and monthly income compared with monthly expenses.
  • Must be a US citizen, permanent resident, or visa holder.
  • You reside in a US state where SoFi is authorized to provide financing.
  • 18 years of age or older.
  • Must be employed or have an offer of employment within the next 90 days.

Rates, Fees, and Repayment Options

SoFi personal loans are available as fixed rate or variable rate loans with the following annual percentage rate ranges:

  • 5.99% APR to 18.38% APR

Personal loans are structured without loan fees:

  • No origination fees.
  • No prepayment fees.
  • No late fees.

The lack of extra loan fees is a strong positive with SoFi’s personal loan program.

However, keep in mind that if you do miss a payment due date or pay less than the monthly payment amount, your personal loan will accrue more interest which will increase your final payment amount on the loan.

SoFi offers slightly longer repayment options – up to 7 years. If you don’t want to stretch your payments out that long, you can also choose terms ranging from 2 years through 7 years.

Borrowing Limits

SoFi has a uniquely broad range of lending amounts. You can apply to borrow anywhere between $5,000 and $100,000, which is a noticeably higher borrowing limit than most online lending platforms.

Your loan proceeds will be direct deposited into your bank account within a few business days of completing all the lending paperwork.

Payoff

Payoff is designed specifically to help you refinance credit card debt into one payment with, hopefully, a lower interest rate.

Payoff wants to empower you, the borrower, and does so by offering various assessments to help you better understand both your financial situation and your relationship to money.

The Payoff Member Experience Team also exists to support you along the way, providing check in calls and encouragement to help you along the way.

Job loss support is also offered, so you can rest assured that Payoff will work with you on your loan payments if you lose your job.

Eligibility Requirements

Payoff requires you to have a credit score of at least 640 to be considered for a loan.

You must also have a debt-to-income ratio that is below 50%, have a credit history age of at least 3 years (meaning you have been actively using credit in one way, shape, or form for at least 3 years), and no delinquencies within the past year.

Payoff doesn’t currently offer joint applications, so you can only apply for a Payoff loan to pay off credit card balances that show up on your personal credit report.

Rates, Fees, and Repayment Options

Payoff loans have fixed interest rates ranging from between 5.99% to 24.99% APR. You can pay your loan back in the next 2 to 5 years.

You will need to pay an origination fee, ranging from between 0% to 5% of your loan amount.

Beyond that – no other fees. Payoff doesn’t charge a late fee, but that doesn’t mean you should not still make a strong effort to always make your payments on time.

For additional information on loan fees and terms, see our Urgent Cash Loan guide.

Borrowing Limits

Payoff loans are available from anywhere between $5,000 and $35,000.

You should receive your funds within two to five business days after completing your loan application.

Prosper

Prosper boasts over $15 billion borrowed and more than 936,000 “people empowered” through their platform offering low interest, fixed term personal loans online.

Whether you are looking to consolidate other debts, purchase a new vehicle, pay off a medical bill, or fix something up around your house, Prosper wants to help. 

Eligibility Requirements

Prosper requires potential borrowers to have a debt-to-income ratio of less than 50% and no bankruptcies in the last year.

You also must have some form of income as your stated income can’t be $0, and your credit report must show less than 5 credit bureau inquiries in the past six months.

Prosper won’t consider lending to you if you have a prior loan through them that has been charged off or were declined in the past four months because of delinquent status or returned payments on any previous Prosper loans.

A perk of Prosper is that they are willing to consider lending to you even if you have a somewhat low credit score.

Many lenders are only interested in working with borrowers who have higher credit scores, but Prosper will consider your application with a score as low as 640.

Rates, Fees, and Repayment Options

Prosper offers loans with an APR range of 6.95% to 35.99%. If you have a lower credit score, you can expect to pay a higher interest rate.

Prosper loans can be paid back within either 3 or 5 year terms.

It is free to apply for a loan with Prosper, but you will be charged an origination fee that can range from 2.4% to 5% if you actually follow through on borrowing money.

There is no fee for paying your loan off early, so if you have extra money later on, save on interest and pay your Prosper loan off early!  Repaying your personal loan is very easy when you use a Personal Loan App.

Borrowing Limits

Prosper lends anywhere between $2,000 and $40,000. This makes Prosper an excellent choice if you are looking for a bit smaller of a loan.

You should receive your money via bank transfer within 1 to 3 business days following the origination of your loan.

Which option is best for you?

If you are looking for a loan specifically to pay off credit card debt at a lower interest rate, or consolidate multiple credit card payments into one, Payoff might be what you are looking for.

Payoff’s interest rates are significantly lower than the average credit card rates, so if you have at least $5,000 in credit card debt it is worth looking into a Payoff loan.

You can also compare other online lenders including Upstart vs LendingTree and the Best Lending Club Alternatives.

SoFi is quite appealing, due to their commitment to not charge any fees. They also have lower interest rates, which can add to the probability that you will probably pay less over the life of your loan than you might with a different lender.

However, SoFi’s borrowing limits are a little higher – you are out of luck if you need to borrow less than $5,000. Don’t forget about those added perks for SoFi borrowers, either.

That unemployment protection is something you hopefully won’t ever need, but could be a lifesaver if you do.

Prosper represents a good option if you need to borrow less than $5,000, or if your credit score isn’t so hot. Keep in mind your offered interest rate will be directly influenced by your credit score. 

A higher credit score will give you the best opportunity for a lower interest rate.  Prosper also doesn’t let you apply for a loan with a cosigner, so be prepared to prove your creditworthiness as an individual borrower.

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