Jun
18
2024
Guide to Bank Affidavits

Guide to Bank Affidavits

By | Financial Independence, money, Terminology | Comments Off on Guide to Bank Affidavits

A bank affidavit is a legal document that proves a person’s relationship with a financial institution. An affidavit can also help in matters of financial fraud and with the immigration process. It does this through the use of official signatories and witnesses to assure proper document completion.

Typically, banks and embassies are places to find a bank affidavit document. Learn more about these important documents and how they work.

What Is a Bank Affidavit?

A bank affidavit is a legal document that attests to someone’s relationship with a financial institution. A bank or credit union can verify certain aspects of a person’s financial activities with this document. A bank affidavit is commonly used for investigative cases of potentially fraudulent activity or in matters involving an immigration application.

Incidentally, you may also sometimes hear the phrase self-proving affidavit. This is somewhat different; it’s a document that can be created when making a will. It helps prove the validity of a will. While an important legal document, it’s not the same thing as a bank affidavit.

Banking customers might wonder what is a bank affidavit and how it is created.

•   When requesting this legal document, you must appear at a bank and have the affidavit completed and signed by an authorized individual of the bank or credit union.

•   A bank affidavit often requires at least one witness to assure the accuracy and completeness of all required information.

A bank affidavit is often used to protect customers from nefarious individuals seeking to swindle people out of their savings. This document can be used to assert that fraudulent transactions were conducted and are not the responsibility of the bank customer (aka the victims of the crime). Beyond fraud cases, immigration applications sometimes request proof of financial support, and a bank affidavit helps provide that documentation.

💡 Quick Tip: Help your money earn more money! Opening a bank account online often gets you higher-than-average rates.

How Does a Bank Affidavit Work?

A bank affidavit works by providing official verification of a person’s or business’ financial account holdings and their relationship with a bank or credit union. This is similar to the process used with an affidavit of title in the home-buying process.

An affidavit is a written statement of facts confirmed by the oath of the party making it. Affidavits must be notarized or administered by an officer of the court with such authority.

A bank affidavit in particular works by attesting to certain financial details of a person or legal entity. Banking representatives are the signatories, while witnesses assure that the details are correct and that the document is completed properly. This process goes a long way in proving the financial standing of the account holder or immigration applicant. These documents can help move matters along through the proper channels, especially in cases of suspected fraud or in the immigration process.

Once completed, the bank affidavit should be securely stored, perhaps in a safe or bank account deposit box. You likely want to be sure that only individuals you trust and who are authorized to view your personal information have access to the document. Also bear in mind that when this sort of legal filing is handled by the court system and other government agencies, they are obligated to keep it confidential. Authorized officials must act in a manner to assure your personal information stays private.

Recommended: Guide to Bank Account Closure Letters

Reasons Why Someone Needs a Bank Affidavit

A bank affidavit is necessary when instances of financial crime are suspected, as well as for immigration purposes. Here’s a closer look.

•   Financial crime: Fraudulent activity is a serious white-collar crime in today’s banking world, and financial institutions must take steps to ensure the safety of customer accounts. It’s worthwhile to bank with a financial institution that uses strict fraud protection and security control measures so that you have the best possible security for your accounts.

When needing a bank affidavit, a customer requests a legal document from the financial institution that cites the fraudulent transactions. The affidavit often indicates that financial damages as a result of the malicious activity are not the responsibility of the banking customer in a statement of unauthorized debt. The bank affidavit can then be used in a court of law if any further legal action be taken. Moreover, the affidavit is helpful in a situation involving a business that’s being targeted for illegal financial activity.

•   Immigration issues: Immigration applicants seeking to legally prove financial support commonly request a bank affidavit, too. In these instances, a bank affidavit demonstrates that a person can financially support the immigrant. The affidavit is also used to outline the individual’s bank account information and holdings. (People with a poor credit history can also open a second chance checking account to begin improving their financial footing.)

In the immigration process, a bank affidavit is used to prove that the applicant can financially support themself with monetary savings and with financial help from family and friends. Those who cannot demonstrate a solid financial footing might get turned down due to the possibility that they will wind up needing welfare programs.

How to Write an Affidavit

If you need to write an affidavit, here are the five steps to follow:

1.    Visit a bank or a credit union if you need the affidavit for financial matters. In cases of immigration, you may also travel to a country’s embassy to find blank forms to fill out.

2.    Complete the form to the best of your ability and request assistance from bank representatives or embassy officials for any information you are unsure about. It can be helpful to have the institution fill out the form to avoid mistakes.

3.    After the bank affidavit form is properly filled out and the details are verified for their accuracy, ensure that all necessary signatures are on it and that witnesses attest to the affidavit’s completion.

4.    Create a copy of the legal document and store it in a secure location. This provides a backup should the original get lost, stolen, or damaged.

5.    Immigration applicants can keep a bank affidavit as a receipt to help expedite their process.

Recommended: Important Estate Planning Documents to Know

Where Can I Get a Bank Affidavit?

You can visit a bank or credit union branch to request a bank affidavit. However, not all locations may have the necessary individuals available to provide the required signatures. It can be worthwhile to check in about this in advance. This legal document is usually available at a nation’s embassy, too.

You must complete the form and sign where indicated. It is sometimes preferable to have the banking or embassy officials fill out the form as much as possible to avoid incorrect details on the document.

The Takeaway

Bank affidavits can be important tools if you are trying to clear up fraudulent activity on your account or if you are working your way through immigration procedures. These forms will need to be carefully filled out, signed, and witnessed, but they play a vital role in certain circumstances. Your financial institution or embassy can partner with you to get this document completed.

If you’re looking for a partner in your everyday financial life, see what SoFi offers.

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Better banking is here with SoFi, NerdWallet’s 2024 winner for Best Checking Account Overall.* Enjoy up to 4.00% APY on SoFi Checking and Savings.

FAQ

How do I write a bank affidavit?

Visit a bank or an embassy to request a form. You will need signatures from certain officials and likely will need witnesses to the document being completed. It might be easier to have the institution write the bank affidavit for you to prevent any inaccuracies or other errors.

Why do banks ask for an affidavit?

Banks might ask for an affidavit to prove certain details associated with their customers. A common reason a bank affidavit is necessary involves situations where a checking or savings account was used fraudulently. Also, a bank might want the assurance that an immigration applicant has a good financial standing.

Where can I get a bank affidavit?

You can usually get a bank affidavit at a bank or credit union branch. In addition, an embassy may have the forms. Keep in mind that you likely need the forms notarized, so it’s a good idea to make sure one is available when you want to complete the documents.

Photo credit: iStock/fizkes

SoFi® Checking and Savings is offered through SoFi Bank, N.A. ©2024 SoFi Bank, N.A. All rights reserved. Member FDIC. Equal Housing Lender.
The SoFi Bank Debit Mastercard® is issued by SoFi Bank, N.A., pursuant to license by Mastercard International Incorporated and can be used everywhere Mastercard is accepted. Mastercard is a registered trademark, and the circles design is a trademark of Mastercard International Incorporated.

SoFi members with direct deposit activity can earn 4.00% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. Direct Deposit means a recurring deposit of regular income to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government benefit payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Direct Deposit”) via the Automated Clearing House (“ACH”) Network during a 30-day Evaluation Period (as defined below). Deposits that are not from an employer or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, or are non-recurring in nature (e.g., IRS tax refunds), do not constitute Direct Deposit activity. There is no minimum Direct Deposit amount required to qualify for the stated interest rate. SoFi members with direct deposit are eligible for other SoFi Plus benefits.

As an alternative to direct deposit, SoFi members with Qualifying Deposits can earn 4.00% APY on savings balances (including Vaults) and 0.50% APY on checking balances. Qualifying Deposits means one or more deposits that, in the aggregate, are equal to or greater than $5,000 to an account holder’s SoFi Checking and Savings account (“Qualifying Deposits”) during a 30-day Evaluation Period (as defined below). Qualifying Deposits only include those deposits from the following eligible sources: (i) ACH transfers, (ii) inbound wire transfers, (iii) peer-to-peer transfers (i.e., external transfers from PayPal, Venmo, etc. and internal peer-to-peer transfers from a SoFi account belonging to another account holder), (iv) check deposits, (v) instant funding to your SoFi Bank Debit Card, (vi) push payments to your SoFi Bank Debit Card, and (vii) cash deposits. Qualifying Deposits do not include: (i) transfers between an account holder’s Checking account, Savings account, and/or Vaults; (ii) interest payments; (iii) bonuses issued by SoFi Bank or its affiliates; or (iv) credits, reversals, and refunds from SoFi Bank, N.A. (“SoFi Bank”) or from a merchant. SoFi members with Qualifying Deposits are not eligible for other SoFi Plus benefits.

SoFi Bank shall, in its sole discretion, assess each account holder’s Direct Deposit activity and Qualifying Deposits throughout each 30-Day Evaluation Period to determine the applicability of rates and may request additional documentation for verification of eligibility. The 30-Day Evaluation Period refers to the “Start Date” and “End Date” set forth on the APY Details page of your account, which comprises a period of 30 calendar days (the “30-Day Evaluation Period”). You can access the APY Details page at any time by logging into your SoFi account on the SoFi mobile app or SoFi website and selecting either (i) Banking > Savings > Current APY or (ii) Banking > Checking > Current APY. Upon receiving a Direct Deposit or $5,000 in Qualifying Deposits to your account, you will begin earning 4.00% APY on savings balances (including Vaults) and 0.50% on checking balances on or before the following calendar day. You will continue to earn these APYs for (i) the remainder of the current 30-Day Evaluation Period and through the end of the subsequent 30-Day Evaluation Period and (ii) any following 30-day Evaluation Periods during which SoFi Bank determines you to have Direct Deposit activity or $5,000 in Qualifying Deposits without interruption.

SoFi Bank reserves the right to grant a grace period to account holders following a change in Direct Deposit activity or Qualifying Deposits activity before adjusting rates. If SoFi Bank grants you a grace period, the dates for such grace period will be reflected on the APY Details page of your account. If SoFi Bank determines that you did not have Direct Deposit activity or $5,000 in Qualifying Deposits during the current 30-day Evaluation Period and, if applicable, the grace period, then you will begin earning the rates earned by account holders without either Direct Deposit or Qualifying Deposits until you have Direct Deposit activity or $5,000 in Qualifying Deposits in a subsequent 30-Day Evaluation Period. For the avoidance of doubt, an account holder with both Direct Deposit activity and Qualifying Deposits will earn the rates earned by account holders with Direct Deposit.

Members without either Direct Deposit activity or Qualifying Deposits, as determined by SoFi Bank, during a 30-Day Evaluation Period and, if applicable, the grace period, will earn 1.20% APY on savings balances (including Vaults) and 0.50% APY on checking balances.

Interest rates are variable and subject to change at any time. These rates are current as of 12/3/24. There is no minimum balance requirement. Additional information can be found at https://www.sofi.com/legal/banking-rate-sheet.

*Awards or rankings from NerdWallet are not indicative of future success or results. This award and its ratings are independently determined and awarded by their respective publications.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

This article is not intended to be legal advice. Please consult an attorney for advice.

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Jun
17
2024
What is Margin Equity & Margin Equity Percentage?

What Is Margin Equity & Margin Equity Percentage?

By | Growing Wealth, invest, Investing, Terminology | Comments Off on What Is Margin Equity & Margin Equity Percentage?

Investors who trade using margin, or funds they’ve borrowed from their broker, do so via a margin account. The amount of money in that account is their margin equity, and their margin equity percentage is the portion of funds in that account that they own (versus funds they’ve borrowed).

It can be important for investors who use margin to understand both margin equity and margin percentage — and their importance when trading or investing with a margin brokerage account.

What Is Margin Equity?

Margin equity is the amount of money in a margin trading account at any given time. A margin account is a stock brokerage account that allows the account holder to borrow up to a specific amount of money from the brokerage firm.

Margin accounts can be a powerful investment tool for sophisticated investors comfortable with higher levels or risk because they have to put up less of their own money in order to make a trade.

Investors can use funds in a margin account to invest in more financial securities, such as stocks, bonds, or funds, that are paid for with funds that exist in the margin account. Money in a margin account is typically in either cash or securities.

Using the value of those assets, a margin account investor can borrow up to 50% of the amount of the cash needed to buy a stock or other security. The securities broker charges interest on any money borrowed in a margin account, plus a commission for executing the trade.

The goal for any margin account investor is to earn back enough profit from a margin account trade to cover the costs of interest on the borrowed margin account funds. If an investor loses money on a margin account trade using borrowed funds, they still have to repay those funds, with interest.

💡 Quick Tip: When you trade using a margin account, you’re using leverage — i.e. borrowed funds that increase your purchasing power. Remember that whatever you borrow you must repay, with interest.

Recommend: What Is Margin Trading and How Does It Work?

Margin Account Rules

The Financial Industry Regulatory Authority (FINRA) sets the minimum balance of a margin account at $2,000. And a brokerage firm may have its own maximum fund limits based on the ability of the investor to prove they can repay any money borrowed from the broker via a margin account.

Any time a margin buying investor wants to buy a new security and requires borrowed margin account funds to do so, the amount of cash the investor puts on the table is known as the margin requirement.

To determine an account’s margin equity, you’d first add up the cash amount borrowed from the brokerage firm and the value of “covered call” options the investor has sold. Any unleveraged assets (like cash or stocks) left in the margin account after the above assets are subtracted is margin equity.

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What Is Margin Equity Percentage?

Margin equity percentage is the portion of unleveraged assets in the account. The process of calculating margin equity percentage is similar to using debt-to-equity ratios.
Here’s an example:

Let’s say the investor buys $10,000 in stocks and funds and has borrowed $5,000 in margin account funds from the broker. The value of that $10,000 investment has increased to $11,000, as the assets purchased have increased by $1,000. The margin loan hasn’t changed – it’s still $5,000. Thus, the investor margin equity in the account stands at $6,000.
If that original $10,000 investment had resulted in a $1,000 loss, the margin equity portion of the account stands at $4,000 ($5,000 – $1,000 = $4,000.)

In the example above, the equity margin percentage is represented by the investors margin equity divided by the value of the margin account.

Using the same figures in the example where the account grows by $1,000 ($10,000 + $1,000), $6,000 divided into $11,000 is 54.5%. Using the same figures where the account declines by $1,000, and the equity value of the margin account is $4,000 and divided by $9,000 (the total amount of money left in the margin account) the margin equity percentage is 44.4%.

💡 Quick Tip: When you’re actively investing in stocks, it’s important to ask what types of fees you might have to pay. For example, brokers may charge a flat fee for trading stocks, or require some commission for every trade. Taking the time to manage investment costs can be beneficial over the long term.

The Importance of Knowing Your Margin Equity and Margin Equity Percentage

Knowing your margin equity and margin equity percentage can help you understand the level of risk that you’re taking in the account. That can help you determine whether you might need to make changes in order to boost your maintenance margin, or the minimum account balance needed to avoid a “margin call.”

Brokerage firms issue margin calls if an investor’s funds fall below the required maintenance margin. If you can’t meet a margin call, the brokerage firm can shut down your margin account and hold you personally responsible for any losses incurred in the account (and charge you additional fees and commissions, as well.)

The Takeaway

As discussed, the existing balance in a margin account is their margin equity, and their margin equity percentage is the portion of funds in that account that they own (versus funds they’ve borrowed).

Investors who choose to trade on margin should keep an eye on their margin equity and margin equity percentage as one metric on measuring the performance and investment risk of that account. A margin account with a higher equity percentage has lower levels of debt, making a margin call less likely.

If you’re an experienced trader and have the risk tolerance to try out trading on margin, consider enabling a SoFi margin account. With a SoFi margin account, experienced investors can take advantage of more investment opportunities, and potentially increase returns. That said, margin trading is a high-risk endeavor, and using margin loans can amplify losses as well as gains.

Get one of the most competitive margin loan rates with SoFi, 11%*

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SoFi Invest encompasses two distinct companies, with various products and services offered to investors as described below: Individual customer accounts may be subject to the terms applicable to one or more of these platforms.
1) Automated Investing and advisory services are provided by SoFi Wealth LLC, an SEC-registered investment adviser (“SoFi Wealth“). Brokerage services are provided to SoFi Wealth LLC by SoFi Securities LLC.
2) Active Investing and brokerage services are provided by SoFi Securities LLC, Member FINRA (www.finra.org)/SIPC(www.sipc.org). Clearing and custody of all securities are provided by APEX Clearing Corporation.
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Neither the Investment Advisor Representatives of SoFi Wealth, nor the Registered Representatives of SoFi Securities are compensated for the sale of any product or service sold through any SoFi Invest platform.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

*Borrow at 11%. Utilizing a margin loan is generally considered more appropriate for experienced investors as there are additional costs and risks associated. It is possible to lose more than your initial investment when using margin. Please see SoFi.com/wealth/assets/documents/brokerage-margin-disclosure-statement.pdf for detailed disclosure information.
Claw Promotion: Customer must fund their Active Invest account with at least $25 within 30 days of opening the account. Probability of customer receiving $1,000 is 0.028%. See full terms and conditions.

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Jun
15
2024
Guide to Banker's Acceptance (BA)

Banker’s Acceptance (BA): Definition, How It Works, Uses

By | money, Terminology | Comments Off on Banker’s Acceptance (BA): Definition, How It Works, Uses

A banker’s acceptance (or BA) is a financial instrument used to guarantee large future transactions, often in the import/export markets. As a debt instrument, it can function as an investment, commonly traded between large banks and institutional investors on the secondary market. It can trade at a discount to par like U.S. Treasury bills in money markets.

BAs play a key role in facilitating international trade and in broader fixed-income markets. While you may not own an individual banker’s acceptance in your checking account, these instruments help promote sound and liquid markets.

What Is Banker’s Acceptance?

A banker’s acceptance (which you may see written as bankers acceptance) is a short-term form of payment guaranteed by a bank; it is often used for international trade transactions.

Banks often make money on the spread between the buy and sell price on a fixed-income asset or through fees and commissions. BAs commonly have a maturity of between 30 and 180 days and trade at a discount to par. Functioning like a post-dated check, they are seen as a relatively safe method of payment for large transactions. BAs are considered short-term debt instruments.

Here are some more details about banker’s acceptance and how these instruments work.

•   The BA is issued and priced based on the creditworthiness of the issuing bank. An investment banker earns a commission for making the transaction.

•   Only customers with a strong credit history can access the BA market. These entities are often corporations involved in international trading (import/export) markets.

•   A banker’s acceptance can also be highly marketable and liquid, allowing money to transfer from one bank to another.

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💡 Quick Tip: Help your money earn more money! Opening a bank account online often gets you higher-than-average rates.

How Banker’s Acceptance Works

A banker’s acceptance is considered a time draft. A business can request one from a bank as a way of gaining enhanced security while conducting a deal. The bank essentially promises to pay the firm that is exporting goods a particular amount of money on a certain date. When it does this, it takes funds out of the importer’s bank account.

Typically, the term of a banker’s acceptance is between 30 and 180 days.

Who Issues Banker’s Acceptance?

Not all banks offer BAs. Businesses with a good relationship with a large bank can obtain a banker’s acceptance. It can be an appealing product for an institution entering a large-value transaction. Like signing a check over to someone, the account holder must have enough cash to execute the transaction.

More than a simple checking account transaction, though, obtaining a BA typically requires an amount of credit to be detailed. There are usually fees involved in obtaining a BA, too.

Who Buys Banker’s Acceptances?

Banker’s acceptances are traded by banks and securities dealers on a secondary market, similar to how debt instruments are traded. They are available for a discount on its face value. The exact value may vary with the rating of the bank that has promised payment on the banker’s acceptance.

How Banker’s Acceptance Is Used

Here’s more detail on how banker’s acceptances can be used.

Checks

Think of a banker’s acceptance as a certified check. It’s a relatively safe way to do a transaction. The money owed is guaranteed on a specific date listed on the BA bill. Credit analysis is usually done to verify the creditworthiness of the issuer, so it’s a bit different than how a bank will verify a check before you deposit it.

BAs are frequently used to facilitate the international trading of goods. A buyer of imported products can issue a BA with a payment date after a shipment is scheduled to be delivered. The seller exporting can then take payment before finalizing the shipment. The exporter in this case can hold the BA to maturity or sell it on the secondary market. Unlike a check, the BA is backed by the guarantee of the bank, not an individual.

Investments

Aside from the import/export market, bankers’ acceptances are used commonly in the investment world. Buyers might purchase a BA and hold it to maturity to effectively earn a rate of return on short-term money. Since BAs are seen as very low-risk products, they are used as a cash-like security.

Still, retail consumers usually won’t be able to purchase a BA in an online or traditional retail bank. The purchase is, as noted above, only available to certain financial entities.

Recommended: What Are Some Safe Types of Investments?

Pros and Cons of Banker’s Acceptance

There are a number of positive aspects of bankers’ acceptances to consider.

Pros

First, the upsides of BAs:

Provides Seller Assurances Against Default

Backed by the guarantee of a bank, a banker’s acceptance is regarded as a high-quality fixed-income security that is often liquid and highly marketable. For importers and exporters, financial transactions can be made to facilitate international trading of goods without the risk that one party goes bust.

Buyer Does Not Have to Prepay for Goods

A banker’s acceptance works like a promissory note so the buyer does not have to prepay. Liability can immediately transfer from the issuer of the banker’s acceptance to the bank. The payment is likely debited only on the due date.

Enhances Confidence in the Deal

Part of the process of issuing a banker’s acceptance is usually having a good credit standing and a relationship with a major bank. Since high-risk customers might not be considered, there is strong confidence in BAs traded. There would be no need for the exporting company to worry about default risk; that lies with the banker. While individual investors often do not engage in BA trading, there are important traditional banking alternatives that feature financial solutions to help facilitate transactions.

Cons

While there are many positive aspects of bankers’ acceptances, there are still some risks for those involved in the transaction and trading of BAs. Consider the following:

Bank May Require Buyer to Post Collateral to Hedge Risk

Collateral is sometimes required for a deal to happen. Collateral provides a backstop should the importer be unable to pay. It can reduce risks to the bank and expedite the deal. Think of it like seller concessions to get a deal done, though collateral is generally not used when buying and selling a home.

Buyer May Default

With a banker’s acceptance, the bank accepts default risk, which can be a downside. The issuing bank typically must honor the payment terms even if the account holder, perhaps an importing/exporting corporation, does not have the cash on the payment date. Not all banks choose to be in this market due to the risk that the buyer could default.

Potential Liquidity Risk

Liquidity risk means an individual or financial institution cannot meet its debt obligations in the short term. Investors may not encounter liquidity risk with a banker’s acceptance instrument, but the issuing bank could have liquidity risk from the importer who must pay. This may be a key consideration for a bank issuing a BA. The secondary market for banker’s acceptance products remains highly liquid.

Pros of BAs

 Cons of BAs
Provides assurance vs. default Bank may require collateral
Buyer doesn’t need to prepay for goods Buyer may default
Enhances confidence that deal will work Potential liquidity risk

The Takeaway

A banker’s acceptance is a debt instrument that plays a key role in well-functioning capital markets. BAs help facilitate international trade through bank guarantees. Knowing about this important fixed-income product type can help individuals understand financial markets and institutions.

When it’s time to take a look at your personal banking partner, it can pay to shop around for the right fit.

Interested in opening an online bank account? When you sign up for a SoFi Checking and Savings account with direct deposit, you’ll get a competitive annual percentage yield (APY), pay zero account fees, and enjoy an array of rewards, such as access to the Allpoint Network of 55,000+ fee-free ATMs globally. Qualifying accounts can even access their paycheck up to two days early.


Better banking is here with SoFi, NerdWallet’s 2024 winner for Best Checking Account Overall.* Enjoy up to 4.00% APY on SoFi Checking and Savings.

FAQ

What is the difference between a letter of credit and a banker’s acceptance?

A letter of credit is a financial instrument that a bank issues for a buyer (the bank client) guaranteeing that a seller will be paid. A banker’s acceptance, on the other hand, guarantees that the bank will pay for a future transaction, rather than the individual account holder.

What is a banker’s acceptance in a real-life example?

An example of a banker’s acceptance would be that, on April 1st, the Acme Bank sends a BA to Back-to-School Supplies, saying it will make funds available on June 1st for a shipment of goods for their client. On June 1st, the school supply company will be able to withdraw those funds.

How safe are banker’s acceptances?

Banker’s acceptances are a relatively safe transaction for all involved, but the exact degree will vary with the creditworthiness of the bank guaranteeing the funds.

Is a banker’s acceptance a short-term investment?

Banker’s acceptances are considered a short-term investment or debt instrument. They are usually traded at a discount, and they are seen as similar to Treasury bills.

Is a banker’s acceptance a loan?

A banker’s acceptance isn’t a loan. It’s a short-term debt instrument, typically with a maturity date of 30 to 180 days.

Photo credit: iStock/Deagreez

SoFi® Checking and Savings is offered through SoFi Bank, N.A. ©2024 SoFi Bank, N.A. All rights reserved. Member FDIC. Equal Housing Lender.
The SoFi Bank Debit Mastercard® is issued by SoFi Bank, N.A., pursuant to license by Mastercard International Incorporated and can be used everywhere Mastercard is accepted. Mastercard is a registered trademark, and the circles design is a trademark of Mastercard International Incorporated.

SoFi members with direct deposit activity can earn 4.00% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. Direct Deposit means a recurring deposit of regular income to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government benefit payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Direct Deposit”) via the Automated Clearing House (“ACH”) Network during a 30-day Evaluation Period (as defined below). Deposits that are not from an employer or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, or are non-recurring in nature (e.g., IRS tax refunds), do not constitute Direct Deposit activity. There is no minimum Direct Deposit amount required to qualify for the stated interest rate. SoFi members with direct deposit are eligible for other SoFi Plus benefits.

As an alternative to direct deposit, SoFi members with Qualifying Deposits can earn 4.00% APY on savings balances (including Vaults) and 0.50% APY on checking balances. Qualifying Deposits means one or more deposits that, in the aggregate, are equal to or greater than $5,000 to an account holder’s SoFi Checking and Savings account (“Qualifying Deposits”) during a 30-day Evaluation Period (as defined below). Qualifying Deposits only include those deposits from the following eligible sources: (i) ACH transfers, (ii) inbound wire transfers, (iii) peer-to-peer transfers (i.e., external transfers from PayPal, Venmo, etc. and internal peer-to-peer transfers from a SoFi account belonging to another account holder), (iv) check deposits, (v) instant funding to your SoFi Bank Debit Card, (vi) push payments to your SoFi Bank Debit Card, and (vii) cash deposits. Qualifying Deposits do not include: (i) transfers between an account holder’s Checking account, Savings account, and/or Vaults; (ii) interest payments; (iii) bonuses issued by SoFi Bank or its affiliates; or (iv) credits, reversals, and refunds from SoFi Bank, N.A. (“SoFi Bank”) or from a merchant. SoFi members with Qualifying Deposits are not eligible for other SoFi Plus benefits.

SoFi Bank shall, in its sole discretion, assess each account holder’s Direct Deposit activity and Qualifying Deposits throughout each 30-Day Evaluation Period to determine the applicability of rates and may request additional documentation for verification of eligibility. The 30-Day Evaluation Period refers to the “Start Date” and “End Date” set forth on the APY Details page of your account, which comprises a period of 30 calendar days (the “30-Day Evaluation Period”). You can access the APY Details page at any time by logging into your SoFi account on the SoFi mobile app or SoFi website and selecting either (i) Banking > Savings > Current APY or (ii) Banking > Checking > Current APY. Upon receiving a Direct Deposit or $5,000 in Qualifying Deposits to your account, you will begin earning 4.00% APY on savings balances (including Vaults) and 0.50% on checking balances on or before the following calendar day. You will continue to earn these APYs for (i) the remainder of the current 30-Day Evaluation Period and through the end of the subsequent 30-Day Evaluation Period and (ii) any following 30-day Evaluation Periods during which SoFi Bank determines you to have Direct Deposit activity or $5,000 in Qualifying Deposits without interruption.

SoFi Bank reserves the right to grant a grace period to account holders following a change in Direct Deposit activity or Qualifying Deposits activity before adjusting rates. If SoFi Bank grants you a grace period, the dates for such grace period will be reflected on the APY Details page of your account. If SoFi Bank determines that you did not have Direct Deposit activity or $5,000 in Qualifying Deposits during the current 30-day Evaluation Period and, if applicable, the grace period, then you will begin earning the rates earned by account holders without either Direct Deposit or Qualifying Deposits until you have Direct Deposit activity or $5,000 in Qualifying Deposits in a subsequent 30-Day Evaluation Period. For the avoidance of doubt, an account holder with both Direct Deposit activity and Qualifying Deposits will earn the rates earned by account holders with Direct Deposit.

Members without either Direct Deposit activity or Qualifying Deposits, as determined by SoFi Bank, during a 30-Day Evaluation Period and, if applicable, the grace period, will earn 1.20% APY on savings balances (including Vaults) and 0.50% APY on checking balances.

Interest rates are variable and subject to change at any time. These rates are current as of 12/3/24. There is no minimum balance requirement. Additional information can be found at https://www.sofi.com/legal/banking-rate-sheet.

*Awards or rankings from NerdWallet are not indicative of future success or results. This award and its ratings are independently determined and awarded by their respective publications.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

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Jun
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Loan Maturity Date: How to Find It for a Personal Loan

Loan Maturity Date: How to Find It for a Personal Loan

By | Financial Independence, personal_loan, Terminology | Comments Off on Loan Maturity Date: How to Find It for a Personal Loan

The maturity date for an installment loan like a personal loan is the date on which you’ll be finished paying off your loan. It’s important to mark this day on your calendar, not only to celebrate successfully paying back your debt, but also because it can tell you important information like how much you’ll ultimately end up paying in interest.

Here’s a look at how to figure out the maturity date for your personal loan, and other important loan terms you should know.

Key Points

•   The maturity date of a personal loan indicates when the borrower will have fully repaid the loan principal and any accrued interest.

•   This date is specified in the loan agreement and is determined by the loan term, typically ranging from 12 to 60 months or longer.

•   Borrowers can pay off their loans early to save on interest, but should check for any prepayment penalties that may apply.

•   The maturity value of a loan includes both the principal and total interest paid, calculated using a specific formula.

•   Timely payments ensure no obligations remain after the maturity date; otherwise, borrowers should contact their lender to discuss repayment options if needed.

What Is the Loan Maturity Date?

The term “maturity date” can refer to loans or investments. In investing, it refers to the day on which you’ll receive the money you invested, for example, in a savings bond or certificate of deposit (CD). You’ll get your investment back, plus any remaining interest that’s due to you.

If you’re a borrower, the maturity date of a loan is the day your lender has scheduled for your loaned funds and any interest to be paid off in full. Provided you’ve made regular and timely payments throughout the term of the loan, you’ll have no further obligation to the lender after the maturity date.

If, for whatever reason, you still have a balance after your loan maturity date, you’ll want to talk to your lender and work out a plan to pay off the remainder of your loan.

Recommended: What Is a Personal Loan?

How Does the Loan Maturity Date Work?

Your loan’s maturity date is a part of your initial loan agreement. You can find it on your loan contract. For example, say you take out a $10,000 personal loan on June 1, 2024 with a 36-month term. The loan maturity date will be 36 months later, on June 1, 2027.

It is possible to pay off your loan early before the loan maturity. This can save you money in interest payments. However, be mindful of whether your lender charges prepayment penalties. These penalties can outweigh the advantages of paying off your loan early.

Length of a Personal Loan Maturity Date

A loan term is the amount of time you’ll have to pay it off before you reach the maturity date, usually calculated in months. You can often find personal loans with terms from 12 to 60 months, and some lenders will offer loans with terms of up to seven years or longer.

The longer your term, the longer you’ll be paying interest, which generally makes these longer-term loans more expensive for borrowers. When choosing a loan, you may want to consider one with the shortest term (and closest maturity date) possible, as long as you can comfortably afford the monthly payments.

Calculating Your Loan Maturity Value

A loan’s maturity value is the sum of the principal plus all of the interest you’ve paid on the loan. The maturity value (MV) formula is:

MV = P + I

Where “P” is the principal amount of the loan and “I” is the loan’s annual percentage rate (APR).

For example, say you take out a $10,000 personal loan with a 36-month term and 12% APR. In this case P = 10,000 and I = 12%. You can use a personal loan calculator to determine how much interest you will pay on the loan over the 36-month term, then add that to the principal loan amount. Here, the equation would look like:

MV = $10,000 + $1,957.15
In this case, MV = $11,957.15

What Happens at the Personal Loan Maturity Date?

At the personal loan maturity date, you will make your final loan payment. Provided you have stayed up-to-date with all of your payments, you will have fully paid off all of your loan principal and whatever interest you owe and have no further obligation to your lender.

However, this may not be possible if you’ve fallen on hard financial times. If you think you’ll have trouble making any of your loan payments on time, it’s a good idea to reach out to your lender immediately and see if there’s anything they can do to help. They may allow you to pay at a later date.

Recommended: What Happens If You Default on a Personal Loan?

Other Important Information on the Personal Loan Agreement

In addition to maturity, you’ll find other useful information on your personal loan agreement.

Loan Principal

Your loan principal is the initial amount of money that you borrow, and it is the amount you agree to pay back with interest. So if you take out a $30,000 personal loan, the loan principal is $30,000.

The total amount of interest that you pay will be determined by the principal, as well as the interest rate. When you make a payment each month, part of the total is applied to your interest while the remainder goes to your principal. Typically, as you make more monthly payments, a larger portion of your payment each month will go toward the principal, until your loan is repaid in full on the maturity date.

Recommended: What Is an Installment Loan and How Does It Work?

Loan Interest Rates

The interest rate is the amount that your lender charges you to borrow, and it’s the main way that lenders make money. Most personal loans rates are fixed interest rates, meaning the rate will not change over the life of the loan. The average personal loan interest rate is currently 12.21%. But rates will vary depending on your credit score.

Variable rate loans, on the other hand, carry interest rates that are usually pegged to a market interest rate. As a result, they can change over the life of the loan.

There may also be hybrid situations in which a loan starts with a fixed interest rate for a period of time, after which it switches to a variable rate. If market rates have gone down, this can be a good thing for borrowers. But if they’ve gone up, a variable-rate loan could be more expensive than its fixed-rate counterpart.

Monthly Loan Payments

You’ll be able to find the amount you owe each month on your personal loan agreement. Your loan payment should be the same over the course of your loan unless you have a variable interest rate.

The Takeaway

For an installment loan like a personal loan, the maturity date is the day of the final loan payment. This date is set based on the loan’s repayment period — how long you have to repay the loan, including both principal and interest. A personal loan is typically considered to have short- to medium-term maturity, since terms generally run from a few months to seven years.

Think twice before turning to high-interest credit cards. Consider a SoFi personal loan instead. SoFi offers competitive fixed rates and same-day funding. Checking your rate takes just a minute.

SoFi’s Personal Loan was named NerdWallet’s 2024 winner for Best Personal Loan overall.

FAQ

What happens if the loan is not paid by the maturity date?

If your loan is not paid by the maturity date, you’ll need to work with your lender to come up with an extended repayment plan. If your last loan payment is late or your loan is in default, you may face penalties and your credit score may be negatively affected.

What is the maturity date on a loan?

The maturity date on a loan is the date by which a borrower has agreed to pay off the loan principal and interest in full. You generally make your final loan payment on the maturity date.

When is the maturity date on a loan?

The maturity date on a loan is the date when your final payment is due. It is based on the term of your loan. If you take out a personal loan on June 1, 2024 and the loan has a 36- month term, for example, the maturity date will be June 1, 2028.

Photo credit: iStock/Pekic

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

Non affiliation: SoFi isn’t affiliated with any of the companies highlighted in this article.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .

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Jun
12
2024
Understanding How P2P Lending Works

Understanding How P2P Lending Works

By | Debt Payoff, money, Terminology | No Comments

Sometimes you need a loan for a venture that a traditional bank might not approve. In these instances, a peer-to-peer (P2P) loan might be what you’re looking for. Peer-to-peer lending, also known as social lending, rose out of the 2008 financial crisis. When banks stopped lending money as freely as they had in the past, potential borrowers had fewer loan options. At the same time, low interest rates meant lower returns from savings accounts or CDs.

Enter P2P lending sites. P2P lenders essentially cut out the middleman (banks and traditional lenders) and created a space for borrowers and investors to do business. Since then, the concept of lending person-to-person has taken off, with the rise of a number of peer-to-peer lending platforms.

Wondering if a P2P loan is right for you? Or if investing in P2P lending is a smart way to diversify your portfolio? Let’s take a look at some of the pros and cons.

Key Points

•   Peer-to-peer (P2P) lending connects borrowers directly with investors, bypassing traditional banks, and emerged after the 2008 financial crisis when lending options diminished.

•   The most common P2P loans are personal loans, with amounts ranging from $1,000 to $50,000, typically having repayment periods of 36 to 60 months.

•   Investors face risks, including the possibility of borrower defaults, as P2P loans are unsecured and not FDIC-insured, making returns uncertain.

•   P2P lending offers benefits such as easier eligibility and competitive rates for borrowers, while providing investors with potential higher returns and a sense of community.

•   Despite its advantages, P2P lending involves risks for both parties, including higher interest rates for borrowers and uncertainties regarding the industry’s regulation and stability.

What Is Peer-to-Peer (P2P) Lending?

P2P lending links up people who want to borrow money with individual investors who want to lend money. P2P lending sites like Prosper, Upstart, and Kiva — three prominent P2P lenders — provide low-cost platforms where borrowers can request loans and investors can bid on them.

The most common type of loan available through P2P lending is a personal loan, which provides borrowers with a lump sum of money they can use for virtually any purpose. However, other types of loans, including car loans, business loans, and home loans, are offered.

Personal loan amounts offered on P2P platforms range anywhere from $1,000 to $50,000 and repayment periods are typically 36 to 60 months. Interest rates can vary widely, from around 7.5% to 35.99%, depending on factors including the individual’s credit history and perceived risk, as well as the purpose of a loan.

The lending platforms make money from serving as the intermediary in this process. In exchange for keeping records and transferring funds between parties, they charge a fee — typically 0.5% to 1.5% of the interest earned — to the investors lending the money. Some platforms also charge origination or closing fees to the borrowers, which typically range from 1% to 8% of the loan amount.

Is Peer-to-Peer Lending Safe?

The bulk of the risk of peer-to-peer lending falls onto investors. It’s possible that borrowers will default on their loans, and that risk increases if the investor opts to lend to those with lower credit ratings. If the loan were to go into default, the investor may not get paid back.

Further, peer-to-peer lending is an investment opportunity, and returns are never guaranteed when investing. There is the risk that investors could lose some or all of the amount they invest. Unlike deposit accounts with a traditional bank or credit union, P2P investments are not FDIC-insured.

How Does Peer-to-Peer (P2P) Lending Work?

The basic P2P lending process works like this: A borrower first goes through a quick soft credit pull with the P2P lending platform of their choice to determine initial eligibility. If eligible to continue, the lender likely will conduct a hard credit pull and then assign a borrower a “loan grade,” which will help lenders or investors assess how much of a risk lending to them might be.

The borrower can then make a listing for their loan, including the interest rate they’re willing to pay. With some P2P lending platforms, the borrower has an opportunity to make a case for themselves; they can provide an introduction and describe why they need the loan. A compelling, creative listing might have more luck grabbing a lender’s attention and trust.

Next, lenders can bid on the listing with the amount they can lend and the interest rate they’d be willing to offer. After the listing has ended, the qualified bids are combined into a single loan and that amount is deposited into the borrower’s bank account.

Peer-to-Peer (P2P) Lending Examples

Here are some examples of popular peer-to-peer lending sites:

•   Prosper: Prosper can provide loans in amounts anywhere from $2,000 up to $50,000. Loan terms are two to five years, and funding can happen in as little as one business day.

•   Upstart: Upstart is an AI lending marketplace that can offer borrowers loans of up to $50,000, with loan terms of either three or five years. It’s possible to check your rate in minutes, and most loans are funded within one business day after signing.

•   Kiva: Kiva connects borrowers in need of money to fund their small businesses with a network of lenders who aren’t seeking to make a profit. Kiva requires borrowers to get some funding from one of the microlending partners. Once a certain threshold amount is met, their loan becomes available for public funding.

Peer-to-Peer (P2P) Lending for Bad Credit

It is possible to get a peer-to-peer loan with a bad credit score (meaning a FICO score below 580). However, those with lower credit scores will almost certainly pay higher interest rates.

Additionally, those with bad credit may have more limited options in lenders, though there are peer-to-peer lending platforms for bad credit. Many platforms have minimum credit score requirements, which tend to be in the range of fair (580-669) to good (670-739). For instance, Prosper requires a minimum score of 600.

If you have bad credit and are seeking a P2P loan, you might first work to improve your credit profile before applying. Or, you could consider getting a cosigner, which can increase your odds of getting approved and securing a better rate if you’re finding it hard to get a personal loan.

Peer-to-Peer (P2P) Lenders Fees

Peer-to-peer lending platforms can charge fees to both borrowers and investors. Which fees apply and the amount of these fees can vary from lender to lender.

A common fee that borrowers may encounter is an origination fee, which is typically a percentage of the loan amount. Other fees that borrowers may face include late fees, returned payment fees, and fees for requesting paper copies of records.

Investors, meanwhile, may owe an investor service fee. This is generally a percentage of the amount of loan payments they receive.

Recommended: Fee or No Fee? How to Figure Out Which Loan Option Saves You the Most

Pros of Peer-to-Peer (P2P) Lending

There are upsides to peer-to-peer lending for both borrowers and investors. However, the benefits will differ for both parties involved.

Pros of P2P Loans for Borrowers

•   Easier eligibility: The biggest advantage for a borrower getting a personal loan peer-to-peer is being eligible for a loan they might not have been able to get from a traditional lender.

•   Faster approval and competitive rates: P2P lenders might approve your loan faster and offer a more competitive rate than a traditional lender would.

•   Possible to pay off credit card debt: One way that people are using P2P loans is to crush their credit card debt. People with high credit card balances could be paying up to 24.37% APR or higher in interest charges. If they can wipe it out with a P2P loan at a lower interest rate, it can save them a lot of money.

•   Option to finance upcoming expenses: Those who are facing a lot of upcoming expenses might find it more cost-effective to take out a P2P loan rather than put those expenses on a high-interest credit card.

Pros of P2P Loans for Investors

•   Promising alternative investment opportunity: Some see P2P lending as a promising alternative investment. When you lend money P2P, you can earn income on the returns as the borrower repays you. Those interest rates can be a few percentage points higher than what you might earn by keeping your money in a savings account or a CD. While there is some risk involved, some investors see it as less volatile than investing in the stock market.

•   Option to spread out risk: P2P lenders also offer many options in terms of the types of risk investors want to take on. Additionally, there are ways you can spread the amount you’re lending over multiple loans with different risk levels.

•   Sense of community: For borrowers and investors, the sense of community on these sites is a welcome alternative to other forms of lending and investing. Borrowers can tell their stories and investors can help give their borrowers a happy ending to those stories.

Cons of Peer-to-Peer (P2P) Lending

Though there are upsides to peer-to-peer lending, there are certainly drawbacks as well. These include:

•   Risk for investors: The biggest disadvantage of P2P lending is risk. Since P2P loans are unsecured, there’s no guarantee an investor will get their money back. The borrowers on a P2P site might be there because traditional banks already declined their application. This means investors might need to do extra legwork on their end to evaluate how much risk they can take on.

•   Potentially higher rates for borrowers: While P2P lenders might approve a loan that a traditional bank wouldn’t, they might offer it with a much higher interest rate. In these cases, it could be wiser to search for alternatives rather than accepting a loan with a costly interest rate.

•   Effort and personal exposure for borrowers: There can be a lot of effort and personal exposure involved for the borrower. Borrowers have to make their case, and their financial story and risk grade will be posted for all to see. While we’re used to sharing a lot of our lives online, sharing financial information might feel like too much for some borrowers.

•   Relatively new industry with evolving regulations: Then there’s the risk of P2P lending itself. The concept is still relatively new, and the decision on how best to regulate and report on the industry is still very much a work in progress. Some lending platforms have already hit growing pains as well. As regulations around the industry change and investors are tempted elsewhere, the concept could lose steam, putting lending platforms in danger of closing.

Recommended: 11 Types of Personal Loans & Their Differences

Peer-to-Peer (P2P) Loans vs Bank Loans

When it comes to P2P loans compared to bank loans, the biggest difference is who is funding the loan. Whereas bank loans are funded by financial institutions, peer-to-peer loans are funded by individuals or groups of individuals.

Further, bank loans tend to have more stringent qualification requirements in comparison to P2P loans. This is why those with lower credit scores or thinner credit histories may turn to peer-to-peer lending after being denied by traditional lenders. In turn, default rates also tend to be higher with peer-to-peer lending.

The Takeaway

Peer-to-peer lending takes out the middleman, allowing borrowers and investors to do business. For borrowers, P2P loans can offer an opportunity to secure financing they may be struggling to access through traditional lenders. And for investors, P2P loans can offer an investing opportunity and a sense of community, as they’ll see where their money is going. However, there are drawbacks to consider before getting a peer-to-peer loan, namely the risk involved for investors.

Whether you’re getting a P2P loan or a loan from a traditional lender, it’s important to shop around to find the most competitive terms available to you.

Think twice before turning to high-interest credit cards. Consider a SoFi personal loan instead. SoFi offers competitive fixed rates and same-day funding. Checking your rate takes just a minute.

SoFi’s Personal Loan was named NerdWallet’s 2024 winner for Best Personal Loan overall.

FAQ

Is peer-to-peer lending safe?

There are certainly risks involved in peer-to-peer lending, particularly for investors. For one, borrowers could default on their loan, resulting in investors losing their money. Additionally, there’s no guarantee of returns when investing.

What is peer-to-peer lending?

Peer-to-peer lending is a type of lending wherein individual investors loan money directly to individual borrowers, effectively cutting out banks or other traditional financial institutions as the middlemen. This can allow borrowers who may have been denied by more traditional lenders to access funds, and provide investors with a shot at earning returns.

What is an example of peer-to-peer lending?

Some popular P2P lending sites include Prosper, Upstart, and Kiva. Borrowers can use peer-to-peer loans for a variety of purposes, such as home improvement, debt consolidation, small business costs, and major expenses like medical bills or car repairs.

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

Non affiliation: SoFi isn’t affiliated with any of the companies highlighted in this article.

Checking Your Rates: To check the rates and terms you may qualify for, SoFi conducts a soft credit pull that will not affect your credit score. However, if you choose a product and continue your application, we will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit pull and may affect your credit.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .

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Terms and conditions apply. SOFI RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE. To qualify, a borrower must be a U.S. citizen or other eligible status, be residing in the U.S., and meet SoFi's underwriting requirements. Not all borrowers receive the lowest rate. Lowest rates reserved for the most creditworthy borrowers. If approved, your actual rate will be within the range of rates at the time of application and will depend on a variety of factors, including term of loan, evaluation of your creditworthiness, income, and other factors. If SoFi is unable to offer you a loan but matches you for a loan with a participating bank, then your rate may be outside the range of rates listed above. Rates and Terms are subject to change at any time without notice. SoFi Personal Loans can be used for any lawful personal, family, or household purposes and may not be used for post-secondary education expenses. Minimum loan amount is $5,000. The average of SoFi Personal Loans funded in 2023 was around $33K. Information current as of 2/26/24. SoFi Personal Loans originated by SoFi Bank, N.A. Member FDIC. NMLS #696891 (www.nmlsconsumeraccess.org). See SoFi.com/legal for state-specific license details. See SoFi.com/eligibility for details and state restrictions.

✝ To check the rates and terms you may qualify for, SoFi conducts a soft credit pull that will not affect your credit score. However, if you choose a product and continue your application, we will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit pull and may affect your credit.

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