Discover vs. SoFi: Which offers better personal loans?
Key takeaways
- Discover is best for borrowers with good credit seeking low borrowing minimums and low interest rates.
- SoFi is best for customers looking to borrow larger amounts while avoiding fees.
- When deciding between Discover and SoFi, consider the amount you want to borrow, your income, and whether you plan to have a co-borrower.
Discover and SoFi are two popular options in the personal loan lending space, offering competitive rates, lengthy terms and quick funding. Both also provide quick prequalification that shows you what terms you may get without affecting your credit score. However, Discover offers slightly lower rates and requires good credit, while SoFi has no minimum credit score requirement and so is accessible to a wider range of borrowers.
Discover vs. SoFi at a glance
Discover offers smaller loans and low fees, while SoFi offers much larger loans with slightly higher rates and no mandatory fees — although opting out of their origination fee may result in a higher interest rate. However, because SoFi allows loan cosigners, borrowers with credit scores across the spectrum have a better chance of getting approved with lower interest rates.
| Discover | SoFi | |
|---|---|---|
| Bankrate Score | 4.8 | 4.8 |
| Better for | Low minimum amount | Extensive borrower perks and benefits |
| Loan amounts | $2,500–$40,000 | $5,000–$100,000 |
| APRs | 7.99%-24.99% | 8.99%-29.49% |
| Loan term lengths | 36–84 months | 24–84 months |
| Fees | $39 late fee | Optional fees |
| Minimum credit score | 660 | No requirement |
| Time to funding | Next business day | As soon as same day |
| Cosigners permitted? | No | Yes |
Discover personal loans
Discover
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Discover offers one of the lowest personal loan rates at 7.99 percent for borrowers with good credit. Its minimum loan amount of $2,500 and next-business-day funding make it a good option for small, unexpected expenses like car or home repairs. On the other hand, other lenders offer much higher loan caps and lower minimum income requirements. Discover’s minimum term is long, at 36 months, but there’s no prepayment penalty to prevent borrowers from repaying their loan early.
SoFi personal loans
SoFi
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SoFi offers a $100,000 loan cap, which is double what many competitors offer. It couples that with longer repayment terms of up to 84 months. This makes SoFi a good option for covering large expenses like relocation, unexpected medical costs, or IVF. SoFi membership carries extra perks like rate discounts and referral bonuses that could help borrowers save. On the other hand, SoFi has a high minimum loan amount.
How to choose between Discover and SoFi
APR range
Discover has one of the industry’s lowest personal loan annual percentage rates at 7.99 percent, making it potentially more affordable than SoFi’s 8.99 percent starting rate. It has a lower maximum interest rate than SoFi as well. Both lenders will appeal to borrowers with good or excellent credit who can secure these companies’ lowest rates.
Minimum credit score
Discover requires a credit score of 660 for approval, locking out borrowers with fair and bad credit. It also requires a minimum income of $25,000 per year. SoFi doesn’t publish a minimum required credit score, claiming it evaluates applicants holistically.
Importantly, SoFi offers joint loan options that could help those with lower credit or no credit qualify. Discover does not allow co-borrowing or cosigning. This makes SoFi a better choice for those building or rebuilding their credit.
Repayment terms
Both Discover and SoFi offer lengthy repayment terms of up to 84 months. On the shorter side, Discover has a longer minimum repayment term of 36 months compared to SoFi’s 24 months. But this matters little, since neither Discover nor SoFi charges a prepayment penalty.
Loan amount
Discover’s minimum borrowing amount is half that of SoFi’s at only $2,500. This makes it a good choice for small, unexpected expenses like car or home repairs. SoFi is the better option for borrowing large amounts, offering loans of up to $100,000 — more than double that of Discover. For big expenses or major home remodels, SoFi is the better choice.
Fees
Discover’s $39 late fee is high compared to competitors, especially those like SoFi that do not charge late fees. Discover does not charge origination fees, while SoFi offers the option to pay an origination fee of 0 percent to 7 percent of the loan amount to lower their APR.
The bottom line: Which lender is better?
Discover and SoFi are both good options for borrowers, offering competitive rates and long repayment terms.;
Discover is the better option for financially established borrowers. Borrowers earning over $25,000 per year with good or excellent credit may get some of the lowest rates available along with long repayment terms. Discover’s low minimum borrowing amount and quick funding are a great option for covering small, unexpected expenses in a pinch.
SoFi also offers low rates for borrowers with good credit, but its options for cosigning and co-borrowing makes it a better choice for those with low or little credit. It’s also a better option for those who need to borrow large amounts quickly with its same-day funding. SoFi membership carries additional benefits for borrowers, including discounts and lower rates.
Discover and SoFi both offer fast prequalification that allows you to compare offers without hurting your credit score. That way, you can review their offers before deciding which lender to work with.
Compare more lenders before applying
You can save hundreds of dollars on your personal loan by shopping around and using prequalification to find the lender offering the best rate, term, and options for you.
