Complete Guide to Loan Protection Insurance

Complete Guide to Loan Protection Insurance

There’s always the concern that something could happen to keep you from following through on your obligations — despite your best intentions — whether it’s an involuntary job loss, illness, injury, or even death.

That’s why some lenders offer loan protection insurance, an insurance policy that’s designed to cover a borrower’s loan payments if they are unable to keep up with the commitment.

If your lender is making this optional coverage available for your personal loan, you may be wondering if it’s right for you. In this guide, we’ll go over some general details you should know about loan protection insurance and provide questions you can ask about the specific policy your lender may be offering.

Loan Protection Insurance Definition

Loan protection insurance is an insurance product that lenders sometimes offer borrowers with certain types of loans, including personal loans. The insurance makes the loan payments — up to a predetermined amount — if a policyholder can’t keep up with the obligation because of a covered event.

Recommended: What Is a Personal Loan?

How Does Loan Protection Insurance Work on Personal Loans?

When you buy insurance, your premiums pay for protection against a potential financial loss. Loan protection insurance is specifically designed to keep a policyholder from defaulting on a covered personal loan when an unexpected life event occurs. The insurer agrees to step in and make payments if the borrower makes a legitimate claim.

What Does Loan Protection Insurance Cost?

The cost of loan protection insurance could vary significantly depending on the type of policy you buy, how much coverage you choose, the state you live in, who you get coverage through, and other factors. Generally, the larger the loan balance is, the more it costs to insure it.

If you’re considering loan protection insurance, you may want to compare the cost of the policy to other types of insurance — such as life insurance, disability insurance, or supplemental insurance — especially if these types of coverage are offered for free or at a subsidized rate through your employer.

One way to reduce your costs, if the option is available, may be to pay the loan insurance premium in a single payment. The alternative choice, to roll the cost of your premiums into your monthly loan payments, may seem more affordable or convenient at the time you take out your loan. But with the latter option, your coverage could end up costing you even more, because you’d be paying interest every month on both your loan and the insurance premium.

What Are the Benefits of Loan Protection Insurance?

Loan protection insurance isn’t necessarily the right fit for everyone, but it does offer some advantages (especially if the policy is reasonably priced). Here are some benefits to consider:

Credit Score

Paying for loan insurance might be worth it if an unexpected hardship occurs and it helps you protect your credit score. A good credit score can play a big part in reaching your future goals — both financial and otherwise. It can make it easier to access credit at a competitive interest rate. And future employers, landlords, lenders, and others may make decisions about you based on your good or bad credit score.

Recommended: What Is Considered a Bad Credit Score?

No Missed Payments

If an illness, job loss, or some other calamity is threatening your finances, knowing your loan protection insurance is making the monthly payments on your covered loan could help minimize the stress. Instead of worrying about falling behind, you may be able to put more of your focus on taking care of yourself and your family.

Risks of Having Loan Protection

One big downside to loan protection insurance is that you might end up paying for something you never use. Here are some other drawbacks to consider:

Cost

Loan protection insurance can be expensive — especially if the lender rolls the cost into your loan payment and you have to pay interest on the insurance every month along with the amount you borrowed. If you’re already worried about affording your monthly loan payment, adding insurance could make it even more challenging.

Interest Rates

Though it lowers the lender’s risk that you might default on your loan, buying loan protection insurance won’t necessarily lower the personal loan interest rate you pay. If a lender tells you it will, you can ask for a breakdown of the loan’s costs with and without insurance to be sure you’re getting the full picture. Remember, the lender may be charging interest on both the monthly insurance premium and the loan amount, and that can make your loan more expensive.

Common Reasons for Being Refused Loan Protection

Because there are different types of loan protection insurance, and policies can differ from one lender to the next, it’s important to review the reasons your policy might not pay out when you make a claim. Some common reasons claims can be refused include:

Part-Time Employment

A policy may require that the holder be employed for a certain number of hours per week — typically at least 16 hours – to qualify for a payout.

Pre-existing Medical Conditions

If you are unable to work because of an illness, injury, or other condition that existed before you purchased the policy, your claim could be refused. It’s important to be clear about which health conditions might not be covered under the policy — and to be upfront about any health issues you know you have when you sign up.

Short-Term Employment

If you are employed under a short-term contract, you likely won’t qualify for a payout if that employment ends.

Self-Employment

Some policies may exclude self-employed individuals altogether, or a policy may place restrictions on certain types of payouts. Self-employed workers might be able to make a claim if they become sick or disabled, for example, but not if they lose the work that provides their income.

Can Only Work Your Current Job

If you are unable to work any job other than the one you hold currently, your claim might be declined.

Is Loan Protection Insurance Required?

Loan protection insurance is optional. It’s illegal for a lender to force you to buy the policy in exchange for approving your loan. If you’re securing your personal loan with collateral (a car or some other asset), you may be required to ensure that property, but you don’t have to insure it through the personal loan lender’s policy.

If you feel you were incorrectly told by a lender that because of the purpose of a loan you wouldn’t be approved unless you purchased loan protection insurance, you can submit a complaint to your state attorney general, state insurance commissioner, or the Federal Trade Commission.

The Takeaway

Loan protection insurance offers borrowers a way to continue making their personal loan payments and protect their credit scores when an unexpected financial hardship occurs. But it can be expensive, and it isn’t necessarily a good fit for everyone.

You may find there are other strategies that make more sense for your individual situation. Some lenders may offer assistance programs for borrowers who are having trouble making their payments. Other alternatives that may cost less than loan protection policies are life insurance or disability insurance policies.

There are no late fees charged on SoFi Personal Loans. And SoFi Customer Support is available to answer your questions and try to get you the help you need.

Check out all the benefits you can get as a SoFi member.

FAQ

Can you get protection on a personal loan?

Yes. Loan protection insurance is available for several different kinds of loans, including personal loans. Some lenders may offer their own assistance programs for borrowers who are having trouble making payments.

What is loan protection insurance?

Loan protection insurance is an insurance product offered by lenders for certain types of loans. The insurance may make payments on a covered loan — up to a predetermined amount — if a policyholder can’t keep up with their loan obligation because of a covered event.

Why should you get personal loan protection insurance?

If you’re concerned about making your payments should a financial hardship occur, and you want to protect your credit score, personal loan insurance can be an option worth considering. A lender can’t require that you enroll in the policy it offers. And there may be other payment protection strategies that make equal or more sense for you.


SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC), and by SoFi Lending Corp. NMLS #1121636 , a lender licensed by the Department of Financial Protection and Innovation under the California Financing Law (License # 6054612) and by other states. For additional product-specific legal and licensing information, see SoFi.com/legal.

Ladder policies are issued in New York by Allianz Life Insurance Company of New York, New York, NY (Policy form # MN-26) and in all other states and DC by Allianz Life Insurance Company of North America, Minneapolis, MN (Policy form # ICC20P-AZ100 and # P-AZ100). Only Allianz Life Insurance Company of New York is authorized to offer life insurance in the state of New York. Coverage and pricing is subject to eligibility and underwriting criteria. SoFi Agency and its affiliates do not guarantee the services of any insurance company. The California license number for SoFi Agency is 0L13077 and for Ladder is OK22568. Ladder, SoFi and SoFi Agency are separate, independent entities and are not responsible for the financial condition, business, or legal obligations of the other. Social Finance, Inc. (SoFi) and Social Finance Life Insurance Agency, LLC (SoFi Agency) do not issue, underwrite insurance or pay claims under LadderLifeTM policies. SoFi is compensated by Ladder for each issued term life policy. SoFi offers customers the opportunity to reach Ladder Insurance Services, LLC to obtain information about estate planning documents such as wills. Social Finance, Inc. (“SoFi”) will be paid a marketing fee by Ladder when customers make a purchase through this link. All services from Ladder Insurance Services, LLC are their own. Once you reach Ladder, SoFi is not involved and has no control over the products or services involved. The Ladder service is limited to documents and does not provide legal advice. Individual circumstances are unique and using documents provided is not a substitute for obtaining legal advice.
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. A hard credit pull, which may impact your credit score, is required if you apply for a SoFi product after being pre-qualified.

Photo credit: iStock/akinbostanci
SOPL0222011

Read more
Is There a Minimum Credit Score for Getting a Personal Loan?

Is There a Minimum Credit Score for Getting a Personal Loan?

Life is pretty darn expensive sometimes, and borrowing money can help bridge certain financial gaps (hello, unexpected roof leak). When it comes time to apply for a personal loan, one major factor lenders take into consideration is an applicant’s credit score. Let’s look at some important factors that lenders look at when issuing personal loans and answer some top personal loan questions like, what credit score is needed for a personal loan?

What Personal Loans Are and How They Work

A personal loan enables consumers to borrow a specific amount of money to use however they would like, unlike a mortgage or auto loan which is earmarked for one specific purpose. Banks, credit unions, and other types of lending institutions offer personal loans.

Because personal loan uses can vary, borrowers can use those funds to finance things like home renovations, a wedding, medical expenses, or many other types of expenses they can’t afford to pay cash for or want to pay off over time. A personal loan can also be used to consolidate multiple sources of debt.

When it comes time to start paying off a personal loan, the borrower pays fixed-amount installments over a set period of time until they fully pay the loan off.

Recommended: What Is a Personal Loan?

What You Need to Qualify for Personal Loans

Like any lending product, applicants need to meet certain standards to qualify for a personal loan or at least to qualify for more favorable lending rates. These are a few factors lenders take into consideration when a potential borrower applies for a personal loan.

Recommended: How Often Does Your Credit Score Update?

Credit Score

Credit scores provide a quick snapshot of an applicant’s overall creditworthiness. There is no universally set minimum credit score for personal loans (although lenders may have their own unique minimum), but the higher a credit score is, the more creditworthy a borrower is considered and the more likely they are not only to be approved for a personal loan, but to qualify for better interest rates and loan amounts. While there are personal loan products on the market designed for applicants with bad credit, they don’t typically come with favorable interest rates or terms.

Credit History

One factor lenders look at when viewing an applicant’s credit report is how long they’ve been using credit. Credit scoring models like FICO® Score take how long a consumer has held credit accounts into consideration when determining their credit score, with longer histories being viewed more favorably.

Debt-to-Income Ratio

Understandably, lenders take how likely someone is to make their personal loan payments on time into account when determining whether or not to lend them money. Lenders look closely at debt-to-income (DTI) ratios which measure how much of their gross monthly income will go toward debt payments. If an applicant has a low ratio, that means they are more likely to manage their loan payments well because they don’t have too many other debts to manage comfortably.

Recommended: Why Your Debt to Income Ratio Matters

Cash Flow

To determine whether or not an applicant can comfortably afford their loan payments, lenders tend to look closely at their current income and their employment history to get an idea of what their cash flow looks like.

Personal Loan Options by Credit Score

When it comes to having the right credit score for a personal loan, there is no one set score that disqualifies someone from getting their hands on one. That being said, generally having a FICO Score in the good range (670-739) or higher gives applicants the widest range of lending opportunities and the most favorable interest rates. Take a closer look at how different FICO credit score ranges can affect lending opportunities.

FICO Credit Score Range

Rating

Lending Opportunities

Exceptional 800+ Wide variety of lending products, favorable interest rates, larger loan amounts
Very Good 740-799 Wide variety of lending products, favorable interest rates, larger loan amounts
Good 670-739 Wide variety of lending products, good loan amounts, fair interest rates
Fair 580-669 Can qualify for some lending products with slightly higher interest rates
Poor <580 Limited lending opportunities, smaller loan amounts, typically high interest rates

Exceptional

An exceptional credit score qualifies applicants for the widest variety of lending products, the most favorable interest rates, and larger loan amounts.

Very Good

Having a very good credit score qualifies applicants for most if not all of the same rates and lending opportunities as exceptional applicants.

Good

Having a good credit score puts a borrower near or slightly above the average of U.S. consumers, and most lenders consider this a good score to have. Applicants shouldn’t struggle to find a personal loan, but they may not be approved for the lowest interest rates.

Fair

Because a fair credit score is below the average score of U.S. consumers, many lenders will approve loans with this score, but rates and terms might not be as desirable as they are for higher scores.

Poor

A poor or “bad credit score” is well below the average score of U.S. consumers and demonstrates to lenders that the applicant may be a lending risk, which greatly limits the applicant’s borrowing options. If they do qualify for a personal loan they likely can expect to be approved at high-interest rates.

Recommended: Can You Get a First-Time Personal Loan With No Credit History?

Alternatives to Personal Loans

If someone’s credit score makes it difficult for them to qualify for a personal loan, they may find they need to pursue alternative lending options. Two of these options are:

•   Credit card cash advance. Consumers with credit cards may be able to request a cash advance from their credit card, which can make it easy to get access to cash quickly. These cash advances typically come with higher interest rates than a regular credit card purchase.

•   Peer-to-peer loans. There are some web-based lending sites that offer some flexibility in qualification requirements. Since these sites are not lenders, just matchmakers of sorts, they may be able to find an investor willing to lend to someone who is looking for a personal loan without credit needed to qualify for a traditional loan.

•   Cross-collateral loans. Someone who already has a loan secured by collateral may be able to qualify for another loan using that same collateral. Not all lenders engage in these types of loans and there are risks involved in this approach. To have a lien released from the asset used as collateral, the borrower must pay both loans — not just one — in full.

Personal Loan Rates From SoFi

Those considering taking out a personal loan may find that SoFi can meet their borrowing needs. SoFi Personal Loans come with low rates and no fees, so borrowing can be as simple and affordable as possible.

Check your personal loan interest rate at SoFi

FAQ

Is a different credit score required for loans of different sizes?

Generally, the higher someone’s credit score is, the larger loan amounts they’ll likely qualify for. Larger loans can also come with longer repayment terms which can make monthly payments more affordable.

Can you get a personal loan without having a credit score at all?

There is no specific credit score needed for personal loans. A consumer may be able to qualify for a personal loan if they don’t have a credit score by applying for a no-credit-check loan. There are some loan products on the market that don’t take credit scores into account.

Can getting a personal loan affect a credit score?

Getting a personal loan can affect credit scores positively and negatively. Applying for a personal loan can result in a hard inquiry to the applicant’s credit report, which may temporarily lower their credit score and increase their DTI. On the flip side, increasing their credit mix by taking out a personal loan, making on-time payments, and building a strong payment history can help improve a person’s credit score.


SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC), and by SoFi Lending Corp. NMLS #1121636 , a lender licensed by the Department of Financial Protection and Innovation under the California Financing Law (License # 6054612) and by other states. For additional product-specific legal and licensing information, see SoFi.com/legal.

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. A hard credit pull, which may impact your credit score, is required if you apply for a SoFi product after being pre-qualified.
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
.

Photo credit: iStock/Moyo Studio
SOPL0122009

Read more
Can You Get a First-Time Personal Loan With No Credit History?

Can You Get a First-Time Personal Loan With No Credit History?

We aren’t born with a credit history and, ironically, one of the only ways to build a credit history is to take out credit — which can be hard to do if someone doesn’t have an existing credit history. If a consumer is hoping to qualify for a personal loan, but they don’t have a credit history, they may find they have a harder time qualifying for a personal loan with favorable interest rates.

Keep reading to learn what options borrowers have for personal loans with no credit check, how to qualify for a personal loan without a substantial credit history, and why a credit score is such an important factor in the loan application process.

What a Personal Loan Is and How It Works

Personal loans are a type of lending product that allows consumers to borrow money to use for a wide variety of purposes. There is no limitation on what someone can use a personal loan for, unlike a mortgage or student loan that dictates what the borrower can spend the borrowed funds on. Personal loans are available through banks, credit unions, and other lending institutions. This type of loan is repaid with fixed-amount installments over an agreed upon period of time.

Recommended: What Is a Personal Loan?

What Is a Credit Score?

Credit scores are used to predict how likely a borrower is to pay a loan back on time and are based on different scoring models that use information from credit reports to determine a credit score. Different companies use different credit scoring models, but most take the following factors about a person’s financial history into account.

•   Bill-paying history

•   Current unpaid debt

•   Number and type of loan accounts they currently have

•   How long current loan accounts have been open

•   How much available credit is currently being used

•   New applications for credit

•   Financial events like debt in collections, bankruptcy, or foreclosure

When a consumer applies to borrow money, lenders generally take their credit score into account to determine if they should lend them money, how much money they should lend them, and at what interest rates. The higher someone’s credit score is, the easier it generally is to qualify for lending products with low-interest rates.

There is no one credit score and what someone’s credit score is depends on the credit scoring model used by the lender they are applying to borrow from.

Each lender also has its own personal loan credit score requirements.

Recommended: What Is Considered a Bad Credit Score?

How Do You Find Your Credit Score?

While consumers might not be able to track down every potential credit score they have, there are some easy ways to secure their credit score to get an idea of what their score is across the board.

•   Credit card or other loan statements. It’s fairly common for consumers to see their credit scores when reviewing their monthly credit card or loan statements, as many credit card issuers and lenders now include them on their monthly statement or on their online account.

•   Non-profit counselors. If someone is working with non-profit credit counselors or HUD-approved housing counselors, those professionals can often provide their clients with a free copy of their credit report and credit score.

•   Credit score services. Watch out for credit score services that require you pay a monthly fee. That being said, consumers can access their credit score through credit score services sometimes for free and sometimes for a price. Often these companies offer free trials that must be canceled or the consumer ends up with a monthly bill.

•   Credit reporting agencies. Consumers can buy their credit score directly from the credit reporting companies.

Recommended: How To Read A Credit Report

What You Can Do If You Don’t Have a Credit Score

It’s fair if someone without a credit history is wondering, can I get a personal loan with no credit? Let’s examine what some of their options may be for making the process of obtaining a personal loan a bit easier.

Establishing Credit

Why are first-time personal loans for no credit history borrowers so hard to get? Unfortunately, it can be challenging to establish credit if no one will give a consumer access to credit products because they don’t have an established credit history. The way to get around this is to either become an authorized user on a trusted friend or family member’s existing credit account or to apply for a secured credit card backed by collateral. With each option, as on-time payments are made, a credit history begins to be established.

Finding a Cosigner

Another option that can make it easier to qualify for credit products without a strong credit history is to add a cosigner (or co-applicant) to a loan or credit card. When lenders see that someone else (someone with good credit) is willing to cosign and make payments on the original borrower’s behalf if they fail to do so, they have a lot more confidence in lending them money.

Using Collateral

Adding collateral to a personal loan means that the lender has something they can seize and use to recoup their losses if the borrower defaults on their payments. For example, auto loans are secured by the car the loan is financing. Before using collateral, a borrower needs to make sure they can make their loan payments on time each month or they risk the lender taking possession of their collateral.

Personal Loan Options With No Credit History

If a borrower is really struggling to find a personal loan because they don’t have a credit history, they can pursue a loan that doesn’t require a credit check. This type of lending product does exist but often comes with high-interest rates and fees to make up for the risk the lender feels they are taking on. In some cases, loans that don’t require credit checks, like payday loans, can be predatory, so consumers should make sure they know what they’re getting into when taking out this type of personal loan.

Applying for a Personal Loan With No Credit

When applying for a personal loan without a strong credit history, the application generally focuses more on other important financial factors like the applicant’s income, and employment history, debt-to-income ratio, and their existing relationship with the lender. Finding a personal loan that doesn’t require a credit check will make it easier to focus on other qualifications.

Checking Your Personal Loan Rate

Before taking out a personal loan, it’s important for potential borrowers to do research on the potential personal loan rates they’ll qualify for and shop around for the best interest rates for their needs. Consumers can get an estimate for their SoFi Personal Loan rate in just one minute.

Learn more about SoFi’s no-fee personal loans today

FAQ

Can someone with no credit score get a personal loan?

It is possible to get a personal loan with no credit score. Lenders can also take current sources of debt, income, and potential collateral into consideration during the application process.

How hard is it to get a personal loan with no credit score?

It isn’t necessarily harder to get a personal loan without a credit score, as personal loans for no credit history borrowers do exist. The bigger challenge is being approved for a personal loan with low interest rates and that doesn’t require collateral or a cosigner.

Do no-credit-score no-cosigner loans exist?

Yes, loans that don’t require a credit check or a cosigner do exist. Again, the problem here is qualifying for favorable rates and terms.


SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC), and by SoFi Lending Corp. NMLS #1121636 , a lender licensed by the Department of Financial Protection and Innovation under the California Financing Law (License # 6054612) and by other states. For additional product-specific legal and licensing information, see SoFi.com/legal.

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. A hard credit pull, which may impact your credit score, is required if you apply for a SoFi product after being pre-qualified.

Photo credit: iStock/Yaroslav Olieinikov
SOPL0122010

Read more
How Much Does a Root Canal Cost?

Root Canal Cost: How Much and How To Pay for It

Having to get a root canal is already painful enough — but then comes the prospect of paying for it.

While the specific cost of a root canal will vary depending on your geographical location, the location of the tooth, your dentist, and other factors, it can easily cost as much as $1,400 or even more out of pocket if you don’t have insurance — and several hundred even if you do.

Fortunately, there are a variety of ways to finance dental work that make it possible to afford the care your teeth require. Here’s what you need to know.

Recommended: Smart Ways to Pay For Your Expensive Dental Work

What Is a Root Canal Treatment?

A root canal is a dental treatment that can remove infection and bacteria from the pulp beneath the hard exterior of the tooth. It’s a pretty common procedure — millions of them are performed each year.

While root canals are often characterized as unpleasant, modern dentistry means this medical intervention can take place relatively painlessly while preserving the natural tooth for both chewing and complementing a smile. All of which is to say, if you’re in need of a root canal, you’re not alone.

Reasons for a Root Canal

There are many different reasons your dentist might prescribe a root canal, including:

•   Tooth decay

•   Large cavities

•   Chips in tooth enamel

•   Periodontal disease

•   Dental trauma

In any of these situations, bacteria might infect the pulp of the tooth and, if left untreated, the infection can spread to the surrounding structures such as gums, other teeth, or even the jawbone. In extreme cases, dental infections can contribute to heart attack or stroke, along with causing a lot of pain.

Taking good care of your teeth can help prevent these causes, but sometimes, accidents or predisposition to decay can play into the equation. In any case, if your dentist prescribes a root canal, it’s probably worth heeding their advice.

How Much Does a Root Canal Cost on Average?

While, again, the cost of a root canal procedure varies greatly depending on factors we’ll dive into in more depth below, the average cost hovers around $1,400 without insurance. With insurance, your bill might be considerably lower: between $200-$500 out of pocket, depending on your coverage and the extent of the procedure.

How Much Is a Root Canal and a Crown?

In many cases, you may also require a crown along with a root canal, which can help protect the tooth for future chewing and use. A crown can add a substantial amount to the overall bill: as much as $1,000 if you’re paying out of pocket.

Factors That Impact the Cost of a Root Canal

Here are some of the specific factors at play that can pull the cost of your root canal up or down.

Insurance Coverage

Obviously, the cost of a root canal — or any dental or medical procedure — is likely to be higher if you don’t have insurance coverage or if your provider is out of your insurance company’s network. Because root canals are usually medically necessary, as opposed to just cosmetic, it’s likely your insurer will cover the procedure itself.

Tooth Location

The location of the infected tooth in your mouth can also have an impact on the total cost of the root canal. That’s because certain teeth are more difficult for dentists to work on than others.

For instance, molars, which are set more deeply in the mouth, are harder to reach and thus command higher costs for dental procedures. Bicuspids, or premolars, cost slightly less, while front teeth needing root canals are likely to cost the least.

Geographical Location

Like most other goods and services, the cost of a root canal can vary largely depending on the local economy — or the prices set by the dental professional you choose.

Type of Dentist

While most general dentists can perform a simple root canal, some teeth with more complicated infections might require an endodontist, who specializes in dental pulp specifically (the part that is treated during the procedure).

Root canal treatment cost by a specialist may be more more than treatment by your general dental professional, as can the use of high-tech equipment such as an ultrasonic needle or water laser.

Root Canal Complications

Although they’re very common and generally safe, like most other medical procedures, root canals do come with some risk.

For example, the root canal can fail due to a breakdown of materials or the provider’s failure to remove all of the bacteria during the procedure. In addition, sometimes the tooth becomes slightly discolored after the procedure due to bleeding on the inside of the tooth.

Ways to Pay For a Root Canal

Although root canals can be expensive, there are many ways to pay for this vitally important procedure without chewing through your savings.

Dental Insurance

Carrying dental insurance is a great way to lower the cost of procedures such as root canal — though keep in mind you’ll be responsible for monthly premiums as well as a potential copay or coinsurance costs.

Health Savings Account

A Health Savings Account is a tax-incentivized account that can help you save and pay for out-of-pocket medical expenses more affordable. However, you must have a High Deductible Health Plan to contribute to one.

Recommended: How to Set Up a Health Savings Account

Personal Loan

Personal loans are a type of financial product that allows you to borrow money for almost any purpose, including dental or medical care. Because they’re unsecured, meaning no collateral is required, they tend to have higher interest rates than auto loans or mortgages — but the rates can be lower than those offered by credit cards.

As with most financial products, your specific rates and terms will vary depending on your credit score and other financial aspects. While rates may be higher, there are still personal loans for low-credit borrowers — and taking one out may still make more financial sense than decimating your emergency fund or putting the procedure on credit.

Recommended: What Is a Fair Credit Score — and What Does It Mean?

Credit Card

Although they usually have fairly high-interest rates, credit cards are another option for paying for necessary medical interventions in a pinch. If you can qualify for a credit card with a 0% promotional interest rate, you’ll have some time to pay the balance without interest if you can pay it off before the promotional period ends.

Other Dental Procedures a Personal Loan Can Cover

Along with root canals, personal loans can be used to cover other common dental procedures, as well, including:

•   Periodontal surgery

•   Dentures

•   Tooth bonding

•   Wisdom tooth removal

•   Dental fillings

Recommended: What Are the Common Uses for Personal Loans?

The Takeaway

Having a root canal can be an important medical intervention for your health and the survival of your affected tooth. And although the procedure is expensive, there are ways to pay for it that won’t add financial pain to your dental pain.

If you’re considering a personal loan — for a root canal or otherwise — SoFi Personal Loans offer fixed rates and no origination, prepayment, or fees. You can check your rate in just one minute without affecting your credit score.* Now that’s a reason to smile.

Check your rate on a personal loan from SoFi

FAQ

How much is a root canal and a crown?

A root canal procedure averages $1,400, and the restorative crown can add another $1,000 the total cost. Costs can vary depending on what part of the country the procedure is performed in and which tooth is being treated.

Why is a root canal so expensive?

Root canals are performed by licensed medical professionals who use specialized equipment. More complex situations may need to be treated by an endodontist, a dental specialist who has completed additional years of training beyond dental school.

What does a root canal cost without insurance?

The full, out-of-pocket cost of a root canal may range from $700 to $1,800, depending on a variety of factors.


*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. A hard credit pull, which may impact your credit score, is required if you apply for a SoFi product after being pre-qualified.
SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC), and by SoFi Lending Corp. NMLS #1121636 , a lender licensed by the Department of Financial Protection and Innovation under the California Financing Law (License # 6054612) and by other states. For additional product-specific legal and licensing information, see SoFi.com/legal.

Photo credit: iStock/AndreyPopov
SOPL0122005

Read more
What Is the Principal Amount of a Loan?

What Is the Principal Amount of a Loan?

A personal loan can be a helpful financial tool when someone needs to borrow money to pay for things like home repairs, a wedding, or medical expenses, for example. The principal amount of a loan refers to how much money is borrowed and has to be paid back, aside from interest.

Keep reading for more insight into what the principal of a loan is and how it affects repayment.

Loan Principal Meaning

What is the principal of a loan? When someone takes out a loan, they are borrowing an amount of money, which is called “principal.” The principal on a loan represents the amount of money they borrowed and agreed to pay back. The interest on the loan is what they’ll pay in exchange for borrowing that money.

Does a Personal Loan Have a Principal Amount?

Yes, personal loans do come with a principal amount. Whenever a borrower makes a personal loan payment, the loan’s principal decreases incrementally until it is fully paid off.

Recommended: What Is a Personal Loan?

Loan Principal vs Loan Interest

The loan principal is different from interest. The principal represents the amount of money that was borrowed and must be paid back. The lender will charge interest in exchange for lending the borrower money. Payments made by the borrower are applied to both the principal and interest.

Along with the interest rate, a lender may also disclose the annual percentage rate (APR) charged on the loan, which includes any fees the lender might charge, such as an origination fee, and the interest. As the borrower makes more payments and makes progress paying off their loan principal amount, less of their payments will go towards interest and more will apply to the principal balance. This principal is referred to as amortization.

Recommended: What Is the Average Interest Rate on a Personal Loan?

Loan Principal and Taxes

Personal loans aren’t considered to be a form of income so the amount borrowed is not subject to taxes like investment earnings or wages are. The borrower won’t be required to report a personal loan on their income tax return, no matter who lent the money to them (bank, credit card, peer-to-peer lender, etc.).

Recommended: What Are the Common Uses for Personal Loans?

Loan Principal Repayment Penalties

As tempting as it can be to pay off a loan as quickly as possible to save money on interest payments, some lenders charge borrowers a prepayment penalty if they pay their personal loan off early. Not all charge a prepayment penalty. When shopping for a personal loan, it’s important to inquire about extra fees like this to have a true idea of what borrowing that money may cost.

The borrower’s personal loan agreement will state if they will need to pay a prepayment penalty for paying off their loan early. If a borrower finds that they are subject to a prepayment penalty, it can help to calculate if paying that fee would cost less than continuing to pay interest for the personal loan’s originally planned term.

How Can You Pay Down the Loan Principal Faster?

It’s understandable why some borrowers may want to pay down their loan principal faster than originally planned as it can save the borrower money on interest and lighten their monthly budget. Here are a few ways borrowers can pay down their loan principal faster.

Interest Payments

When a borrower pays down the principal on a loan, they reduce how much interest they need to pay. That means that each month as they make a new payment they reduce their principal and the interest they’ll owe in the future. As previously noted, paying down the principal faster can help the borrower pay less interest. Personal loan lenders allow borrowers to make extra payments or to make a larger monthly payment than planned. When doing this, it’s important that borrowers confirm that their extra payments are going towards the principal balance and not the interest. That way, their extra payments work towards paying down the principal and lowering the amount of interest they owe.

Shorten Loan Term

Refinancing a loan and choosing a shorter loan time can also make it easier to pay down a personal loan faster. Not to mention, if the borrower has a better credit score than when they applied for the original personal loan, they may be able to qualify for a lower interest rate which can make it easier to pay down their debt faster. Having a shorter loan term typically increases the monthly payment amount but can result in paying less interest over the life of the loan and paying off the debt faster.

Cheaper Payments

Refinancing to a new loan with a lower interest rate may reduce monthly loan payments, depending on the term of the new loan. With lower monthly scheduled payments, they may opt to pay extra toward the principal and possibly pay the loan in full before the end of the term.

Other Important Information on the Personal Loan Agreement

A personal loan agreement includes a lot of helpful information about the loan, such as the principal amount and how long the borrower has to pay their debt. The more information the borrower has about the loan, the more strategically they can plan to pay it off. Here’s a closer look at the information typically included in a personal loan agreement.

Loan Amount

An important thing to note on a personal loan agreement is the total amount the borrower is responsible for repaying.

Loan Maturity Date

A personal loan’s maturity date is the day the final loan payment is due.

Loan Interest Rates

The loan’s interest rate and APR should be listed on the personal loan agreement.

Monthly Loan Payments

The monthly loan payment amount will be listed on the personal loan agreement. Knowing how much they need to pay each month can make it easier for the borrower to budget accordingly.

The Takeaway

Understanding how a personal loan works can make it easier to pay one-off. To recap — What is the principal amount of a loan? The principal on a loan is the amount the consumer borrowed and needs to pay back.

Consumers looking for a personal loan may want to consider a SoFi Personal Loan. With competitive interest rates and a wide range of loan amounts available to qualified borrowers, there may be a personal loan option that works for your financial needs.

Learn more about SoFi Personal Loans today

FAQ

What is the principal balance of a loan?

The principal balance of a loan is the amount originally borrowed that the borrower agrees to pay back.

Does the principal of the loan change?

The original loan principal does not change. The principal amount included in each monthly payment will change as the amortization period progresses. On an amortized loan, less principal than interest is paid in each monthly payment at the beginning of the loan and incrementally increases over the life of the loan.

How does loan principal work?

The loan principal represents the amount borrowed. Usually, this is done in monthly payments until the loan principal is fully repaid.


SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC), and by SoFi Lending Corp. NMLS #1121636 , a lender licensed by the Department of Financial Protection and Innovation under the California Financing Law (License # 6054612) and by other states. For additional product-specific legal and licensing information, see SoFi.com/legal.

External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.

Photo credit: iStock/cagkansayin
SOPL0322006

Read more
TLS 1.2 Encrypted
Equal Housing Lender