PenFed vs. SoFi: Which offers better personal loans?

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 a little more quickly with SoFi, but PenFed has a significantly lower maximum APR.

Since you can prequalify with either lender, compare your rates with both to see which is better for your finances.

PenFed vs. SoFi at a glance

PenFed and SoFi 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.

PenFed personal loans

Best for low maximum APR.

Bankrate’s view

PenFed 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) — and it’s rare to find a maximum APR as low as 17.99 percent. 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 time.

SoFi personal loans

Best for long repayment terms

Bankrate’s view

SoFi has much more flexible terms than PenFed. You can borrow more — up to $100,000 — and it has 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 member-only events.

Pros

• Same-day funding.
• Flexible repayment terms.
• Member benefits.

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 most federal credit unions, PenFed caps its rates at 17.99 percent. SoFi’s rates start higher and go up to 29.49 percent — and if you don’t opt for autopay, that APR could be higher.

Minimum credit score

SoFi has a slightly lower minimum credit score of 680 versus PenFed’s minimum of 700. Ultimately, there isn’t much of a difference between the two. Both require good credit to qualify. And to get the lowest rates, you will likely need excellent credit.

Repayment terms

SoFi is more flexible than PenFed. 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 will 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 means it may be easier to find an option that fits your budget.

Time to receive funds

Both these lenders offer fast enough underwriting to serve as emergency loans. SoFi can fund some loans as soon as the same day, 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 is able to fund a little more quickly doesn’t mean it will. Plus, your bank will still need time to process the deposit.

Fees

PenFed doesn’t charge any fees, like origination fees, to finance your loan. However, you may need to pay late fees or returned payment fees if you miss a payment.

SoFi has an optional origination fee. If you choose to pay one, it may lower your interest rate. The exact origination fee you pay isn’t clear, and neither is the amount your interest will be reduced by. Still, it may be worth considering — especially since SoFi has no other fees, including late fees.

The bottom line: Which lender is best?

PenFed and SoFi are both solid 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.