SoFi vs. Discover: Which Is Right for You?

SoFi and Discover are both online banks that offer personal loans. Depending on your expense and the loan features you’re looking for, one may be a better fit than the other. For example, SoFi offers larger loan amounts, more discount opportunities, and potential same-day funding, while Discover offers lower minimum and maximum APRs, smaller loan amounts, and no fees. 

You might choose SoFi if you have a large expense, need the money ASAP, or plan to use the bank for other financial needs. On the other hand, you might choose Discover if you have excellent credit and can qualify for a lower rate. Prequalify with both lenders to get estimates.

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How Discover and SoFi compare

The table below shows how SoFi and Discover compare based on several important loan features. We’ll also cover the benefits and drawbacks of each bank and their suitability for different financing needs.

SoFi personal loans

SoFi is a fintech company and FDIC-insured bank that offers deposit accounts, investments, and other products in addition to personal loans. Getting a loan from SoFi gives you access to member benefits, like a free consultation with a financial planner, a credit on your mortgage closing costs, and a 20% discount on estate planning services. 

SoFi offers personal loans up to $100,000 with flexible repayment terms and several rate discount opportunities:

• 0.25% autopay discount
• 0.25% discount for opening a SoFi direct deposit account
• 0.25% discount for allowing SoFi to pay your creditors directly when using your loan for debt consolidation
• 0.50% discount for returning borrowers who meet eligibility requirements

To get SoFi’s lowest APR, you’ll need to have excellent credit and take advantage of the autopay and direct deposit discounts. And though the lender advertises same-day funding, we found, on average, that loans fund in five days, according to Credible data on loans closed over the past year.

Discover personal loans

Like SoFi, Discover is an FDIC-insured online bank that offers personal loans, banking, and credit cards. Discover is now a division of Capital One. Discover offers competitive APRs and flexible repayment terms between three and seven years. The bank caps loan amounts at $40,000. Discover is one of the few lenders that is completely fee-free, which means no origination fees, late fees, or any other fees. 

You can use a Discover personal loan for almost any purpose, including debt consolidation, but the bank restricts you from using your loan funds to directly pay off a Discover or Capital One credit card. If you have credit card debt with those issuers, you may be better off with a personal loan from SoFi.

Tips on choosing between SoFi and Discover

When deciding between SoFi and Discover, consider the following loan features.

APR range

Discover has a lower starting APR than SoFi and caps rates at 24.99%, whereas SoFi APRs go up to 35.99% before discounts. That doesn’t necessarily mean you’ll qualify for a lower rate with Discover, since each bank weighs your financial information differently. Both Discover and SoFi offer the option to prequalify without hurting your credit, so it’s best to check your rate estimate with both banks before choosing.

Minimum credit score and income

Neither SoFi nor Discover publishes a minimum credit score, but it’s best to have at least a good credit score if applying to either. If you’re looking for a bad credit personal loan, neither SoFi or Discover is an option.

SoFi doesn’t disclose a minimum income requirement, but Discover specifies that borrowers must have at least $25,000 in annual income. 

Loan purpose

Both SoFi and Discover allow you to use your personal loan funds for a variety of household purposes, from veterinary bills to auto repairs, but Discover has a few more restrictions than SoFi. You can’t use a Discover personal loan to consolidate certain types of debt, like secured debts and credit cards from Discover or Capital One. Both SoFi and Discover prohibit you from using your loan funds to pay for college tuition. 

Related: What Can't You Use a Personal Loan For?

Repayment terms

Both banks offer repayment terms up to seven years. But SoFi offers a wider range of repayment options than Discover, with terms starting at just two years (as opposed to Discover’s minimum three-year term). 

However, neither bank charges prepayment fees, so you can pay off your Discover personal loan or SoFi personal loan early. Just be aware that Discover and SoFi will apply extra payments to unpaid interest before reducing your loan balance. 

Loan amount

Discover offers smaller loan amounts than SoFi, with a minimum of $2,500, making it the better choice if you need to borrow less than $5,000 (SoFi’s minimum). But SoFi offers much larger loans — up to $100,000 if you can qualify — so the bank may be a better fit for people who need to finance home remodeling, IVF treatment, or other large expenses. 

Time to fund

SoFi offers same-day funding for some, but Discover funded loans faster for most borrowers, according to Credible data on loans closed with both lenders over the past year. If you’re looking for an emergency loan, you may get your cash faster with SoFi if you’re approved and can sign your documents before 6 p.m. ET on a business day —  as long as you’re not using the funds to pay creditors directly. Discover typically sends the funds to your bank account the next business day after you sign.

Related: How Long Does It Take To Get a Personal Loan?

How to apply for a personal loan

While the personal loan application process varies from one lender to the next, you can generally expect to follow these steps when applying for a loan with SoFi or Discover.

1. Evaluate your finances: Check your credit score to get a sense of whether you’ll qualify with either SoFi or Discover. Then, consider your budget to determine how much of a loan payment you can afford. 
2. Prequalify: Check your rate with SoFi, Discover, and a few other personal loan lenders by entering your Social Security number and desired loan amount. This step only requires a soft credit check, so it won’t impact your credit score. Bear in mind that the prequalified APR is only an estimate. 
3. Choose the best option: SoFi and Discover may offer you a choice of repayment terms. Generally speaking, you should choose the option with the lowest APR, as long as you can afford the monthly payment. Also, compare options based on other factors, like the total interest, incidental fees, and the lender’s track record of customer service. 
4. Formally apply: Proceed with the formal application. This typically triggers a hard credit check, which may cause a slight decline in your credit score. You may need to upload documents that prove your identity and income. 
5. Sign your loan agreement: If you’re approved, make sure the final rate and term still meet your needs. After carefully reviewing the terms and conditions, e-sign your loan documents. 
6. Get the cash: While the exact timeline will depend on your application and where you bank, you can expect to receive the loan funds in your bank account within a few days.

Which lender is best for you?

Best for debt consolidation: SoFi

Unlike Discover, SoFi doesn’t restrict borrowers from directly paying off credit card debt from certain issuers. SoFi offers the option to send the loan funds directly to your creditors and even offers a discount if you use more than half your loan funds for this purpose. SoFi also offers refinancing, so it’s possible to get a lower interest rate once you’ve paid down your debt balances.

Best for low rates: Discover

If you have excellent credit, you may qualify for a lower rate with Discover than SoFi, which could save you hundreds or thousands of dollars over the course of your loan. Discover offers APRs as low as 7.99%. You don’t need to enroll in autopay to qualify for the lowest rate, either. 

Best for large loans: SoFi

While Discover caps loan amounts at $40,000, SoFi offers large personal loans up to $100,000. That makes SoFi a great choice for costly expenses like medical bills or home improvement projects. The bank’s seven-year repayment term option also provides for affordable monthly payments on large loans. 

Best for small loans: Discover

Discover offers personal loans in amounts as low as $2,500. That makes the bank a better fit for borrowers who need cash for smaller expenses like auto repairs or veterinary bills, since SoFi’s minimum loan amount is $5,000. 

Best for emergencies: SoFi

SoFi is known for fast funding. If you sign your loan documents by 6 p.m. ET on a business day, there’s a high likelihood you’ll get the cash in your bank account that day. If you urgently need cash for a home repair or other emergency expense, SoFi may be a better fit than Discover.