topic Re: Variable APR or Fixed APR? SOFI Personal Loan in General Credit Topics

Variable APR or Fixed APR? SOFI Personal Loan

Anonymous — Sat, 20 Feb 2016 22:31:45 GMT

Hey Guys,

Just needed suggestions .... Which is better a VARIABLE APR OR A FIXED APR for SOFI personal loan? The variable APR is almost 2% lower than the Fixed APR. Also, is it better to take a 7 year loan compared to 3 or 5 years loan? If I take the 7 years I will be paying about $200 more than the required monthly payment, is that better than taking a 5 year loan? It's about $200 monthly payment difference between a 7 year and 5 year loan. Thank you

Re: Variable APR or Fixed APR? SOFI Personal Loan

Anonymous — Sat, 20 Feb 2016 23:16:10 GMT

Variable or fixed?

It depends primarily on your comfort with and ability to afford the risk of a variable rate loan. If you are the type who is going to lose sleep if interest rates start to climb, then choose a fixed rate (because it's not worth the stress). If you would be in danger of defalting if rates go too high, then choose a fixed rate (because the financial damage from that would be much worse that the extra interest).

However, historically, you're likely to pay less over the course of the loan if you start with the variable rate, so if you're comfortable and can afford it if it goes against you, then the variable rate is a good option.

7-year loan?

If the rates are the same, and you are confident that you will be discipled to make the additional principle payment every month, then there is no downside to the 7-year term. And there is an advantage in that if something unforseen happens, you do have the option to go back to your lower payment without refinancing. If the 7-year rate is higher, though, I would not the choose 7-year just for the sake of keeping that option open. If you know that you're going to be too tempted not to make the additional monthly priciple payment you're talking about, then forcing yourself to do it with a shorter-term loan would be wise.

(Edited for clarity)

Re: Variable APR or Fixed APR? SOFI Personal Loan

Anonymous — Sat, 20 Feb 2016 23:26:07 GMT

@Anonymous wrote:
Variable or fixed?

It depends primarily on your comfort with and ability to afford the risk of a variable rate loan. If you are the type who is going to lose sleep if interest rates start to climb, then choose a fixed rate (because it's not worth the stress). If you would be in danger of defalting if rates go too high, then choose a fixed rate (because the financial damage from that would be much worse that the extra interest).

However, historically, you're likely to pay less over the course of the loan if you start with the variable rate, so if you're comfortable and can afford it if it goes against you, then the variable rate is a good option.

7-year loan?

If the rates are the same, and you are confident that you will be discipled to make the additional principle payment every month, then there is no downside to the 7-year term. And there is an advantage in that if something unforseen happens, you do have the option to go back to your lower payment without refinancing. If the 7-year rate is higher, though, I would not the choose 7-year just for the sake of keeping that option open. If you know that you're going to be too tempted not to make the additional monthly priciple payment you're talking about, then forcing yourself to do it with a shorter-term loan would be wise.

(Edited for clarity)

Thank you Plip! I appreciate your input

Here's my preaaproved loan for $50K with APRs and monthly payments below. If you were me, which one would you choose to loan for $50K?

Get Your Rate

Loan Amount

$50,000

Fixed Rate payment never changes

If your desired term is not shown, please call 1-855-456-SOFI to speak to a customer service representative.

Term Monthly payment Interest rate Lifetime cost

SelectSelected	3-year	$1,581.04	8.615%	$56,917.44
SelectSelected	5-year	$1,053.15	9.625%	$63,189.00
SelectSelected	7-year	$839.78	10.375%	$70,541.52

Variable Rate lowest payment today

Initial payments and rates shown. The rate cap is 12.49%. If your desired term is not show, please call 1-855-456-SOFI to speak to a customer service representative.

Term Monthly payment Interest rate Lifetime cost

SelectSelected	3-year	$1,558.87	7.655%	Varies
SelectSelected	5-year	$1,014.54	8.030%	Varies
SelectSelected	7-year	$798.88	8.780%	Varies

Re: Variable APR or Fixed APR? SOFI Personal Loan

Anonymous — Sat, 20 Feb 2016 23:41:10 GMT

Personally, I would choose a variable rate loan. I'm comfortable rolling the dice when the odds are in my favor. I expect it not to work out for the best every time, but I count on the times it does work in my favor to more than offset the times it doesn't.

It sounds like you're comfortable with about a $1,000/month payment (based on your saying that you would pay $200 more per month than the 7-year monthly payment). If that's accurate, then I would choose the 5-year variable.

But that's me, with my comfort with risk. It also assumes that if rates jump 6 points in the next few years that a $1,200/month payment isn't going to kill you. I don't see rates going up 6 points in the next five years (in fact, I'd be quite shoked), but you have to consider it (or worse) if you take out a variable rate loan. Again, I would do it without any qualms -- but I'm not saying you should do it.

Re: Variable APR or Fixed APR? SOFI Personal Loan

Anonymous — Sat, 20 Feb 2016 23:52:51 GMT

@Anonymous wrote:
Personally, I would choose a variable rate loan. I'm comfortable rolling the dice when the odds are in my favor. I expect it not to work out for the best every time, but I count on the times it does work in my favor to more than offset the times it doesn't.

It sounds like you're comfortable with about a $1,000/month payment (based on your saying that you would pay $200 more per month than the 7-year monthly payment). If that's accurate, then I would choose the 5-year variable.

But that's me, with my comfort with risk. It also assumes that if rates jump 6 points in the next few years that a $1,200/month payment isn't going to kill you. I don't see rates going up 6 points in the next five years (in fact, I'd be quite shoked), but you have to consider it (or worse) if you take out a variable rate loan. Again, I would do it without any qualms -- but I'm not saying you should do it.

Thank you! What do you think about choosing the option too of getting the 7 year variable and I will pay $1000 monthly (about $200+ more additional payment), will that shorten the number of years if I pay more than the required monthly payment? That way, I have the option of either paying the minimum monthly or pay $1000.

Re: Variable APR or Fixed APR? SOFI Personal Loan

Anonymous — Sun, 21 Feb 2016 00:01:43 GMT

I could see doing that. It gives you just a little more wiggle room.

That's exactly what we did with our mortgage. We could have afforded a 15-year and saved a fraction of a point, but you just never know what is going to happen. So we went with a 30-year, just in case. But we still made the same payments we would have made on a 15-year (and usually a little more than that). We paid a little more interest over the years, but it was worth the piece of mind.

It sounds like that's the direction you're leaning. If it is, it's a valid choice that I would be very comfortable with.

Re: Variable APR or Fixed APR? SOFI Personal Loan

Anonymous — Sun, 21 Feb 2016 00:06:23 GMT

@Anonymous wrote:
I could see doing that. It gives you just a little more wiggle room.

That's exactly what we did with our mortgage. We could have afforded a 15-year and saved a fraction of a point, but you just never know what is going to happen. So we went with a 30-year, just in case. But we still made the same payments we would have made on a 15-year (and usually a little more than that). We paid a little more interest over the years, but it was worth the piece of mind.

It sounds like that's the direction you're leaning. If it is, it's a valid choice that I would be very comfortable with.

Thank you . Yes you are right, I am leaning more on the 7 year and make payments like a 5 year loan, which can give me a little wiggle room along the way. Just want to clarify, so If I take the 7 year loan and make payments like the 5 year loan, will the loan be done in 5 years?

Re: Variable APR or Fixed APR? SOFI Personal Loan

Anonymous — Sun, 21 Feb 2016 00:16:25 GMT

Pretty close. If you took out the 7-year loan and made the $1014/month payments, it would take just over 5 years and 1 month. The extra month would be because of the marginally higher interest rate.

If you made payment of $1032.59/month (on the 7-year loan), you would pay it off in exactly 5 years.

All that assumes interest rates don't go up.

By the way, for anyone interested, I used an amortization calculator to figure that out. You can google that and find them on the web.

Re: Variable APR or Fixed APR? SOFI Personal Loan

Anonymous — Sun, 21 Feb 2016 00:23:24 GMT

@Anonymous wrote:
Pretty close. If you took out the 7-year loan and made the $1014/month payments, it would take just over 5 years and 1 month. The extra month would be because of the marginally higher interest rate.

If you made payment of $1032.59/month (on the 7-year loan), you would pay it off in exactly 5 years.

All that assumes interest rates don't go up.

By the way, for anyone interested, I used an amortization calculator to figure that out. You can google that and find them on the web.

Thank you very much Plip! You are a GREAT resource here in this forum and you have given me great advices and informations. I appreciate it! . Thank you and Have a great day

Re: Variable APR or Fixed APR? SOFI Personal Loan

Appleman — Sun, 21 Feb 2016 00:24:58 GMT

Calculating the variable range:

Variable rate but never increases: $50,000 @ 8.78% for 84 payments of $798.88. Total cost $67,106.14

(Fixed rate option) $50,000 @ 10.375% for 84 payments of $839.78. Total cost $70,541.52

Interest rate maxes out the day after you close the loan: $50,000 @ 12.49% for 84 payments of $895.79. Total cost $75,246.56

My suggestion would be take the variable rate (you are lucky as not all states allow that option) for 7 years. Interest rates are most likely to rise, could they rise 3.71%, sure. Anyones guess. If you need to apply for another loan in the future your DTI ratio would be better with a payment of $798.88 versus $1581.04 on your report. (You can always pay as much as you like)

Consider taking the variable rate for 7 years and pay the $895.79 payment from day one instead of the $798.88 minimum and you save $2,605.79 while shaving 11 months off the loan.

Congrats good luck and let us know how the process is with SoFi.com. My loan was 9 days from application to money in my account.

Fixed Rate payment never changes

If your desired term is not shown, please call 1-855-456-SOFI to speak to a customer service representative.

Term Monthly payment Interest rate Lifetime cost

SelectSelected	3-year	$1,581.04	8.615%	$56,917.44
SelectSelected	5-year	$1,053.15	9.625%	$63,189.00
SelectSelected	7-year	$839.78	10.375%	$70,541.52

Variable Rate lowest payment today

Initial payments and rates shown. The rate cap is 12.49%. If your desired term is not show, please call 1-855-456-SOFI to speak to a customer service representative.

Term Monthly payment Interest rate Lifetime cost

SelectSelected	3-year	$1,558.87	7.655%	Varies
SelectSelected	5-year	$1,014.54	8.030%	Varies
SelectSelected	7-year	$798.88	8.780%	Varies

Re: Variable APR or Fixed APR? SOFI Personal Loan

Anonymous — Sun, 21 Feb 2016 00:28:33 GMT

@Appleman wrote:

If you need to apply for another loan in the future your DTI ratio would be better with a payment of $798.88 versus $1581.04 on your report.

This is an excellent point, which I missed. Another good reason to go with the 7-year term, even if you plan to pay more.

Re: Variable APR or Fixed APR? SOFI Personal Loan

Anonymous — Sun, 21 Feb 2016 00:31:54 GMT

@Appleman wrote:
Calculating the variable range:
@Anonymous rate but never increases: $50,000 @ 8.78% for 84 payments of $798.88. Total cost $67,106.14
@(Fixed rate option) $50,000 @ 10.375% for 84 payments of $839.78. Total cost $70,541.52
@Interest rate maxes out the day after you close the loan: $50,000 @ 12.49% for 84 payments of $895.79. Total cost $75,246.56

My suggestion would be take the variable rate (you are lucky as not all states allow that option) for 7 years. Interest rates are most likely to rise, could they rise 3.71%, sure. Anyones guess. If you need to apply for another loan in the future your DTI ratio would be better with a payment of $798.88 versus $1581.04 on your report. (You can always pay as much as you like)

Consider taking the variable rate for 7 years and pay the $895.79 payment from day one instead of the $798.88 minimum and you save $2,605.79 while shaving 11 months off the loan.
Congrats good luck and let us know how the process is with SoFi.com. My loan was 9 days from application to money in my account.

Fixed Rate payment never changes
If your desired term is not shown, please call 1-855-456-SOFI to speak to a customer service representative.
Term Monthly payment Interest rate Lifetime cost
SelectSelected 3-year $1,581.04 8.615% $56,917.44
SelectSelected 5-year $1,053.15 9.625% $63,189.00
SelectSelected 7-year $839.78 10.375% $70,541.52
Variable Rate lowest payment today
Initial payments and rates shown. The rate cap is 12.49%. If your desired term is not show, please call 1-855-456-SOFI to speak to a customer service representative.
Term Monthly payment Interest rate Lifetime cost
SelectSelected 3-year $1,558.87 7.655% Varies
SelectSelected 5-year $1,014.54 8.030% Varies
SelectSelected 7-year $798.88 8.780% Varies

Thank you Appleman for your advice and calculations Appreciate it!

Re: Variable APR or Fixed APR? SOFI Personal Loan

Anonymous — Sun, 21 Feb 2016 00:43:12 GMT

Thank you Both Plip and Appleman!!!

Re: Variable APR or Fixed APR? SOFI Personal Loan

Appleman — Sun, 21 Feb 2016 03:35:30 GMT

You are welcome. It was pretty awesome to pay-off some nagging credit card balances once the funds were in my checking.

As soon I was approved I applied for student loan refinancing with SoFi and was able to drop my interest rate 1.75% which will save me $3000 in interest over the life of the loan.

I am impressed with SoFi.com, now if only they would be able to fund a mortgage in my state......

Re: Variable APR or Fixed APR? SOFI Personal Loan

Anonymous — Mon, 22 Feb 2016 20:08:51 GMT

@Appleman wrote:
You are welcome. It was pretty awesome to pay-off some nagging credit card balances once the funds were in my checking.

As soon I was approved I applied for student loan refinancing with SoFi and was able to drop my interest rate 1.75% which will save me $3000 in interest over the life of the loan.

I am impressed with SoFi.com, now if only they would be able to fund a mortgage in my state......

Thank you Appleman

Re: Variable APR or Fixed APR? SOFI Personal Loan

Anonymous — Tue, 23 Feb 2016 21:09:31 GMT

Update!!!

Got approved and ready for funding after underwriting review within 24 hrs ... but the loan terms and amount changed . I am approved now for $37,855.47 for 7 year fixed term at 11.740% and a monthly payment of $663 . There were a few changes on my Experian report since I got preapproved about a month ago and I think that's why my terms and amount changed. I wonder why its not even $37,000 or $38,000 instead of $37,855.47 . I thought I would get the full $50K with less than 10% APR for 7 year variable . I gues they counter offered my request. What do you guys think? Should I go ahead and take it since I already got a hard inquiry also from them on my Experian credit report? Do you think there are other lenders with better offer? Thank you.

Re: Variable APR or Fixed APR? SOFI Personal Loan

Appleman — Wed, 24 Feb 2016 01:13:10 GMT

If I remember the Lending club loan that you were also looking at had a 20%plus interest rate. If you need to see how good that rate is do the soft pull qualifications for both Prosper and Lending Club. I bet SoFi will still be competitive. If the interest rate will save you money I would say go for it. Good luck!

Re: Variable APR or Fixed APR? SOFI Personal Loan

Anonymous — Wed, 24 Feb 2016 01:51:19 GMT

@Appleman wrote:
If I remember the Lending club loan that you were also looking at had a 20%plus interest rate. If you need to see how good that rate is do the soft pull qualifications for both Prosper and Lending Club. I bet SoFi will still be competitive. If the interest rate will save you money I would say go for it. Good luck!

Thank you Appleman . SOFI has the best rate compared to Lending Club, Promise and even Upstart and Borrowers first ( I was preapproved for all). I will go for SOFI. I called them just to ask the changes but the SOFI customer agent was very nice and requested my year end 2015 paystub to check if he can change and raise up the amount and lower my APR ... crossing my fingers . It's back on underwriting review

Re: Variable APR or Fixed APR? SOFI Personal Loan

Anonymous — Wed, 24 Feb 2016 18:00:08 GMT

Hi Guys,

Just want to update you All :

I got approved for SOFI personal loan 7 year fixed 11.740% for $37,855.47... (not my original request for $50K) ... but before I signed the document I called to reconsider my loan request for the full $50K. SOFI asked me for my 2015 year end paystub, and within 24 hrs ... APPROVED for $50K with a lower rate of 10.375% 7 year fixed. Better than the original approval. I am pleased of how easy was the process with SOFI and just within 24 hrs you'll get a response and also they have a great customer service

Re: Variable APR or Fixed APR? SOFI Personal Loan

Anonymous — Wed, 24 Feb 2016 18:51:25 GMT

Again Another Update!!!

I called again today to request for a change to A Variable Rate instead of the Fixed Rate .... APPROVED!!! 7 YEAR VARIABLE/ 8.780% APR (with auto pay)/ $50K!!!

Great experience ... No hassle ... within 24 hrs approval !!! Thank you SOFI!!!