PenFed vs. SoFi: Which offers better personal loans?
Key takeaways
- PenFed has some of the lowest rates on the market, and they offer small loan amounts.
- SoFi offers flexible loan terms and large loan amounts with no membership requirement.
- You may get quicker funding with SoFi, but you can prequalify with both lenders to see which works best for you.
PenFed and SoFi are two highly ranked lenders that offer personal loans with competitive rates. The major difference between the two is cost and speed. You may be funded more quickly with SoFi, but PenFed has a significantly lower maximum APR.
Since you can prequalify with either lender, compare the rates from both to see which one is better for your finances.
PenFed Credit Union vs. SoFi at a glance
PenFed and SoFi each offer competitive starting rates. But some key differences — such as loan amounts, maximum advertised rates and repayment terms — may be more important for your borrowing experience.
|
Bankrate Score |
4.7 |
4.7 |
|
Better for |
Low APR range, small loan amounts | Large loan amounts, long repayment terms |
|
Loan amounts |
$600–$50,000 |
$5,000–$100,000 |
|
APRs |
8.99%-17.99% |
8.99%-29.49% (with autopay) |
|
Loan term lengths |
12–60 months |
24–84 months |
|
Fees |
$29 late payment fee |
Optional origination fee of up to 7% |
|
Minimum credit score |
700 |
300 (with a co-applicant) |
|
Time to funding |
1-2 business days |
As fast as the same business day |
PenFed personal loans
-
PenFed Credit Union offers smaller loans, ranging from $600 to $50,000. Both its minimum and maximum rates are lower than SoFi’s range of annual percentage rates (APRs), partly due to the mandatory 18 percent rate cap imposed on federal credit unions. To qualify, you must become a member, which requires depositing $5 into a PenFed savings account.
-
Pros
- Competitive APR range
- No origination fee
- Financial hardship assistance available
Cons
- Membership required
- Less flexible loan terms
- Longer funding timeframe
SoFi personal loans
-
SoFi has much more flexible terms than PenFed. You can borrow more — up to $100,000 — and choose from a wide range of repayment terms. Plus, it doesn’t require origination fees, though you can opt to pay an origination fee in exchange for a lower APR. There are also member benefits, including access to rewards, discounts and members-only events.
-
Pros
- Same-day funding possible
- Flexible repayment terms
- Unique member perks
Cons
- Optional origination fee
- Less competitive interest rates
- High minimum loan amount
How to choose between PenFed and SoFi
PenFed and SoFi are solid options for borrowers seeking competitive rates and those who want to apply with a co-borrower. Since each lender offers a prequalification process, you can check your rate with both to see which will be the better choice for your needs.
APR range
PenFed is the clear winner when it comes to APR. Like all federal credit unions, PenFed caps its rates at 18 percent. SoFi’s rates start higher and go up to 29.49 percent — and if you don’t opt for autopay or accept the optional origination fee, that APR could be higher.
Minimum credit score
SoFi is more accessible since it doesn’t set a minimum credit score, as long as you apply with a co-applicant. PenFed, on the other hand, requires a good credit score: a minimum of 700. Both require good credit to qualify individually. However, SoFi seems more flexible with credit scores, so it’s worth applying if your credit score is lower. To get the lowest rates with either lender, you will likely need excellent credit.
Repayment terms
SoFi wins again for its flexibility — your loan term can be as long as 84 months, but this isn’t necessarily a positive. A longer loan term means lower monthly payments, but you’ll pay more in interest over the life of the loan.
Still, you aren’t obligated to take out a loan for 84 months. You can always opt for a shorter term, and SoFi’s flexible loan terms make it easier to find an option that fits your budget. If you’re seeking a short-term loan, PenFed offers repayment options as short as 12 months, versus SoFi’s 24-month minimum.
Time to receive funds
Both lenders offer fast underwriting, making them suitable options for emergency loans. SoFi can fund some loans on the same day you apply, provided you finalize your application before 7 p.m. ET on a business day. PenFed is slightly slower, with a turnaround of one to two business days.
For most people, this likely won’t be a significant difference. Just because SoFi can fund more quickly doesn’t mean it will. Plus, your bank will still need time to process the deposit.
Fees
PenFed doesn’t charge origination fees to finance your loan. However, you may need to pay late or returned payment fees if you miss a payment.
SoFi has an optional origination fee of up to 7 percent in exchange for a lower interest rate. But it’s unclear exactly how much lower your rate might be, and it’s worth remembering that SoFi’s lowest rate of 8.99 percent is only possible with an origination fee attached. Still, this lender may be worth considering, especially since SoFi doesn’t charge other fees, including late fees.
Bottom line: Which lender is better?
PenFed and SoFi are both solid, industry-leading options. SoFi offers larger, more flexible loan terms, while PenFed is a better choice if you want to take out a smaller loan at more competitive rates.
Compare lenders before applying
Because you can prequalify without affecting your credit, it’s a good idea to compare personal rates with these lenders and others before you submit a formal application.
