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Editorial Note: The editorial content on this page is not provided or commissioned by any financial institution. Any opinions, analyses, reviews, statements or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by any of these entities prior to publication.

Updated July 12, 2018

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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 permanent resident in an eligible state and meet SoFi’s underwriting requirements. Not all borrowers receive the lowest rate. To qualify for the lowest rate, you must have a responsible financial history and meet other conditions. If approved, your actual rate will be within the range of rates listed above and will depend on a variety of factors, including term of loan, a responsible financial history, years of experience, income and other factors. Rates and Terms are subject to change at anytime without notice and are subject to state restrictions. SoFi refinance loans are private loans and do not have the same repayment options that the federal loan program offers such as Income Based Repayment or Income Contingent Repayment or PAYE. Licensed by the Department of Business Oversight under the California Financing Law License No. 6054612. SoFi loans are originated by SoFi Lending Corp., NMLS # 1121636. (www.nmlsconsumeraccess.org).

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Student Loan Refinancing

Fixed rates from 3.899% APR to 7.804% APR (with AutoPay). Variable rates from 2.480% APR to 6.990% APR (with AutoPay). Interest rates on variable rate loans are capped at either 8.95% or 9.95% depending on term of loan. See APR examples and terms. Lowest variable rate of 2.480% APR assumes current 1 month LIBOR rate of 2.22% plus 0.91% margin minus 0.25% ACH discount. Not all borrowers receive the lowest rate. If approved for a loan, the fixed or variable interest rate offered will depend on your creditworthiness, and the term of the loan and other factors, and will be within the ranges of rates listed above. For the SoFi variable rate loan, the 1-month LIBOR index will adjust monthly and the loan payment will be re-amortized and may change monthly. APRs for variable rate loans may increase after origination if the LIBOR index increases. The SoFi 0.25% AutoPay interest rate reduction requires you to agree to make monthly principal and interest payments by an automatic monthly deduction from a savings or checking account. The benefit will discontinue and be lost for periods in which you do not pay by automatic deduction from a savings or checking account. *To check the rates and terms you qualify for, SoFi conducts a soft credit inquiry. Unlike hard credit inquiries, soft credit inquiries (or soft credit pulls) do not impact your credit score. Soft credit inquiries allow SoFi to show you what rates and terms SoFi can offer you up front. After seeing your rates, 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 inquiry. Hard credit inquiries (or hard credit pulls) are required for SoFi to be able to issue you a loan. In addition to requiring your explicit permission, these credit pulls may impact your credit score.

Personal Loans

Fixed rates from 6.99% APR to 14.87% APR (with AutoPay). Variable rates from 6.40% APR to 12.70% APR (with AutoPay). SoFi rate ranges are current as of October 1, 2018 and are subject to change without notice. Not all rates and amounts available in all states. See Personal Loan eligibility details. Not all applicants qualify for the lowest rate. If approved for a loan, to qualify for the lowest rate, you must have a responsible financial history and meet other conditions. Your actual rate will be within the range of rates listed above and will depend on a variety of factors, including evaluation of your credit worthiness, years of professional experience, income and other factors. See APR examples and terms.

Interest rates on variable rate loans are capped at 14.95%. Lowest variable rate of 6.40% APR assumes current 1-month LIBOR rate of 2.22% plus 4.175% margin minus 0.25% AutoPay discount. For the SoFi variable rate loan, the 1-month LIBOR index will adjust monthly and the loan payment will be re-amortized and may change monthly. APRs for variable rate loans may increase after origination if the LIBOR index increases. The SoFi 0.25% AutoPay interest rate reduction requires you to agree to make monthly principal and interest payments by an automatic monthly deduction from a savings or checking account. The benefit will discontinue and be lost for periods in which you do not pay by automatic deduction from a savings or checking account.

To check the rates and terms you 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. See Consumer Licenses.

Minimum Credit Score: Not all applicants who meet SoFi’s minimum credit score requirements are approved for a personal loan. In addition to meeting SoFi’s minimum eligibility criteria, applicants must also meet other credit and underwriting requirements to qualify.

Parent Loans

Fixed rates from 3.549% APR to 7.430% APR (with AutoPay). Variable rates from 2.360% APR to 7.350% APR (with AutoPay). Interest rates on variable rate loans are capped at either 8.95% or 9.95% depending on term of loan. See APR examples and terms. Lowest variable rate of 2.360% APR assumes current 1 month LIBOR rate of 2.10% plus 0.91% margin minus 0.25% autopay discount. Not all borrowers receive the lowest rate. If approved for a loan, the fixed or variable interest rate offered will depend on your creditworthiness, and the term of the loan and other factors, and will be within the ranges of rates listed above. For the SoFi variable rate loan, the 1-month LIBOR index will adjust monthly and the loan payment will be re-amortized and may change monthly. APRs for variable rate loans may increase after origination if the LIBOR index increases. The SoFi 0.25% AutoPay interest rate reduction requires you to agree to make monthly principal and interest payments by an automatic monthly deduction from a savings or checking account. The benefit will discontinue and be lost for periods in which you do not pay by automatic deduction from a savings or checking account. Unlike Federal Parent PLUS loans, the SoFi Parent Loan is not discharged in the event of death or permanent disability of the borrower or the student on whose behalf the loan is taken out.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

Nick Clements
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Nick Clements is a writer at MagnifyMoney. You can email Nick at nick@magnifymoney.com

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National Credit Card Fraud Survey

Editorial Note: The editorial content on this page is not provided or commissioned by any financial institution. Any opinions, analyses, reviews, statements or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by any of these entities prior to publication.

Credit card fraud regularly steals the headlines and scares us. From big data breaches (like Home Depot and Target) to regular warnings from credit card companies, fraud seems to be constantly around us and in the news. However, a recent national survey conducted by MagnifyMoney, along with Google Consumer Surveys, shows that although the incidence of fraud is indeed high, most people who experienced fraud have never lost a dime. Credit card companies are promising $0 liabilities for fraud, and according to our survey, they seem to be delivering.

Here are the key findings:

  • 22.1% of consumers have experienced credit card fraud.
  • Account take-over is the most common form of fraud. 93% of all fraud is account, not identity take-over.
  • 96% of consumers never had to pay a dime. The credit card company took care of the fraud an absorbed any financial loss.
  • Consumers were very satisfied with the service received during the fraud. 94.2% of consumers polled said that the service was excellent (72.9%) or good (21.3%).

Although fraud does occur frequently, the financial impact on consumers is limited.

Nick Clements, the Co-Founder of MagnifyMoney (and a former Risk Director who ran fraud departments of credit card companies) noted:

The risk of credit card fraud continues to increase, and consumers need to remain vigilant. However, our approach to fraud needs to change. We need to recognize that fraud will probably happen to us at some point, and preventing fraud completely is out of our hands. All it takes is a crooked bartender or a breached megastore and we are at risk. More importantly, we need to focus on early detection and reporting of fraud to our credit card companies. Because of the $0 liability promised by most credit card issuers, a fraud that is reported on time should cost the consumer nothing. Our effort should be focused on early detection and rapid reporting of any credit card fraud. The good news: there are plenty of tools out there (most of them free) that can help consumers detect fraud early and avoid financial loss. Despite the many grim headlines, credit card fraud should not be one of our biggest worries.

The Difference Between Account and Identity Take-Over

An account take-over occurs when a fraudster steals the details or the actual plastic of an account that is already open. The fraudster will then use that information (or card) to start making purchases. This is the easiest type of fraud to fix: just close the account and re-issue the card with a new number. And that represents 93% of all fraud committed, according to this survey.

A more difficult type of fraud to deal with is identity take-over. This occurs when your Social Security and other personal information is stolen, and the fraudster starts opening new accounts in your name that you don’t know about. You can try to prevent that type of fraud by ensuring that you protect your Social Security number. You can detect that type of fraud by signing up for a credit monitoring service and keeping a regular eye on your credit report. If you do end up becoming an identity theft victim, you should use IdentityTheft.gov, a government website, to manage the process. (Note: If you sign up for a credit monitoring service, you would likely have access to an identity theft case management team who will help you through the process).

In summary:

  • Account take-over is the most common form of fraud. But it is also the easiest to resolve.
  • Identity take-over is much more difficult to deal with, but does not happen as often. You need to pro-actively monitor your credit to ensure you are aware of a potential breach.

Chip & Signature: And Who Does It Help?

Millions of Americans have been receiving new credit cards with chips, for increased security. In our survey, 86% of Americans now have some or all of their credit cards with chips. However, chips exist to protect the banks rather than the consumers. The fraud liability is with the banks, not the people using the credit cards (so long as the consumer reports any fraud on time). Chips will help to reduce some fraud in physical stores. But it is not useful for online and mobile commerce, where the physical plastic is not used.

In addition, there have been many complaints about the increased transaction time of chip cards. 20% of those surveyed complained that chip cards are “painfully slow.”

What Can A Consumer Do?

MagnifyMoney has published a free Credit Monitoring and Identity Theft Guide. This guide can help you create a strategy to reduce the risk of identity theft happening, to identify fraud as soon as it does happen and to make it as easy as possible to resolve any fraud that does happen on your account.

And make sure you check you statements regularly. In our survey, 34.3% of consumers found out about the fraud by looking at their statement. With more and more people signing up for e-statements, it is too easy to ignore the details. But consumers need to stay vigilant and remember: so long as they catch it and report it quickly, they should have nothing to worry about.

This survey was commissioned by MagnifyMoney and conducted by Google Consumer Surveys. 3,496 people nationally were questioned via the internet and their mobile phones. Of those sampled, a nationally representative sample of 594 people who had experienced credit card fraud were given the questions referenced in this article. You can read more about the methodology of Google Consumer Surveys here.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

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Have a question to ask or a story to share? Contact the MagnifyMoney team at info@magnifymoney.com

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National Auto Lending Study

Editorial Note: The editorial content on this page is not provided or commissioned by any financial institution. Any opinions, analyses, reviews, statements or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by any of these entities prior to publication.

The rapid growth in subprime auto lending has been making headlines recently. Total auto loan volume is close to $1 trillion, and 20% of that is being made to subprime borrowers. $27 billion of bonds backed by subprime loans were issued in 2015, compared to just under $9 billion in 2010. Even within the subprime market, the loans have become even more subprime. In 2011, 12% of securitized loans went to people with credit scores below 550. In 2015, 30% had scores below 550.

And now the delinquency and losses are starting to accelerate. According to Fitch, delinquencies on subprime auto bonds have hit historic records. 5.16% of borrowers are at least 60 days delinquent, which is the highest level since 1996. Losses have reached 9.74% as of February, an increase of 34% year-over-year. Even worse, these are delinquency and loss rates in a rapidly growing portfolio. These numbers will only get worse.

MagnifyMoney conducted a national survey (with Google Consumer Surveys*) and found that:

  • 64.4% of auto loan borrowers let the dealer find them a loan
  • 52.1% of auto loan borrowers never had their income verified
  • 82.6% of auto loan borrowers who took out a loan with a term longer than 5 years did so to lower their monthly payment
  • 17.4% of auto loan borrowers who took out a loan with a term longer than 5 years did so because “it was the dealer’s idea”
  • Only 34.9% of borrowers shopped online for a lower interest rate before walking onto the dealer’s lot

These are troubling findings. MagnifyMoney believes that many of the bad underwriting practices of the subprime mortgage crisis can be found in the subprime auto sector.

As a reminder, here are some of the critical elements of the subprime mortgage crisis:

  • Mortgage brokers received very high commissions for booked loans, but had no “skin in the game.” The brokers had a high incentive to book as many loans as possible, regardless of the credit risk.
  • Banks and mortgage companies compete for brokers’ business. That means they try to make booking a mortgage as easy as possible, by reducing verification requirements, loosening credit requirements and increasing commissions.
  • Banks and mortgage companies did not verify much information (often including income), which increased the risk of brokers committing fraud.
  • Banks and mortgage companies created increasingly complex products. The main purpose: reduce the monthly payment as much as possible to get people into bigger and bigger loans.

The MagnifyMoney survey indicate that many elements of the subprime mortgage crisis are evident in today’s auto lending market:

  • Dealers have potentially replaced the role of broker. Auto dealerships make money when they sell cars, and they make commissions (called “dealer discounts”) when they sell auto financing. Dealers, and in particular the people selling the finance products, have limited “skin in the game” if borrowers default. In many ways, dealers have the same financial incentives as the subprime mortgage brokers.
  • Auto finance companies are competing to get the dealer’s business. As a result, they are often compelled to reduce the credit criteria and relax verification. The dealer networks, which control the customer and the volume, have a lot of power of banks and finance companies hungry for volume. If a bank asks too many questions, the dealer can easily move to the next easiest lender.
  • Down payment requirements have been reducing. And, in the MagnifyMoney survey, we see that income verification requirements have also been reducing significantly.
  • To help reduce monthly payments and increase loan amounts, banks have been offering longer terms. It is now relatively easy to take out a used auto loan with a 7-year term.

The Challenge with 7 Year Loans

Extending the term on an automobile loan, especially for used cars, can be dangerous. The car loan will lose value much faster than the loan will be paid off. The concern for subprime borrowers is that the used car will break down and the borrower will be upside down (which means they will owe more money than the value of the car).

On a 7-year loan, only about 25% of the principal balance will be paid off after two years of payments. According to Edmunds, a new car loses up to 25% of its value every year. Borrowers, especially with low down payments, will likely owe much more than the value of their car during a meaningful portion of the car ownership cycle.

What Should Consumer Do?

Here are thoughts from MagnifyMoney Co-Founder Nick Clements:

“Lending bubbles usually look the same. Credit criteria is loosened. Verification standards are relaxed. The people selling the loans make money when the loans are booked, but do not suffer from losses when the loans go bad. Consumers focus on the monthly payment, rather the economics of the deal. And we convince ourselves that it will be different this time. Almost all of those elements are present in the current subprime auto lending market. Some players are clearly worse than others. And as delinquency and losses increase, which they inevitably will do, we will discover which companies have remained prudent, and which companies have been irresponsible.

But our main focus at MagnifyMoney is on the consumer. And consumers need to shop around for better financing deals before they visit the car lot. They should keep the term on their loans as short as possible, because automobiles depreciate rapidly in value. And sometimes they just might have to buy a cheaper car.”

* MagnifyMoney partnered with Google Consumer Surveys to conduct a national survey of 673 individuals who own an automobile. Participants were at least 18 years old and resided in the United States at the time of the survey.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

MagnifyMoney
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Have a question to ask or a story to share? Contact the MagnifyMoney team at info@magnifymoney.com

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