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Comment by sidlls | Hacker News Reader

They reduced my student loan payment and cut the term in half at the same time. I was able to complete the application and have a decision in less than two days, and the funds were transferred two days later.

They're also much easier to get substantial unsecured term debt through at a lower price than, say, Prosper or Lending Club.

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I'm afraid your scenario isn't possible or you've been taken advantage of for your lack of financial fluency.

There is no way your loan payments were reduced and the remaining term cut in half at the same time, unless your original interest rate was above 20-25%.

I'm glad I wasn't the only person saying "wait.. what?" over that one.

He had to have received a large rate reduction or made a massive payment on the principle. I don't see how the math would work out otherwise.

Or there's a balloon payment at the end of the term, hidden in the fine print.

Look at the types of loans they have. Their target market is people in a crisis, students, and people with a lack of financial fluency.

People make horrible financial desicions and a lot of companies profit off of them.

I'm chuckling so hard right now. You have no idea what the principle, terms or rates involved are yet feel the need to make assertions about possibilities and my knowledge of finance. It's an incredible representation of a certain kind of know-it-all nonsense.

Post some particulars then. Maybe not of your terms but something like it to see how to reduce the payment and cut the term in half.

That's easy: let the new rate be r' and the original rate be r.

Then choose r'/r < 1/2 by a sufficient amount. For example: let (P; r; t) be ($100,000; 8%; 30 years). The payment is around $740/mo. Now take (P; r; t) equal to ($100,000; 3%; 15 years). The payment is around $700/mo.

You can adjust for the fact that some months of repayment already occurred so the term reduction is to a new term greater than half the remaining periods on the existing loan and the present value (i.e. new principle) is smaller and bump r' up accordingly to achieve the same result.

Either way it's hardly "impossible" and actually quite easy to do if there's a significant difference between the original loan conditions and the refinance/consolidation.

The power of compound interest! For anyone else wishing to double check sidlls math:

https://www.wolframalpha.com/input/?i=$100000+3%25+15+year+m...

https://www.wolframalpha.com/input/?i=$100000+8%25+30+year+m...

Sure but who is going to lend you $100,000 at 3% for 15 years, with no asset securing the loan?

Again, the specific numbers of your situation would go a long way to shutting up the skeptics here. Either your initial rate was absurdly high, or you're exaggerating.

If he's an MD or Engineering Phd from Standford, that's the security that SoFi originally innovated on right?

I'm sure the SoFi salesperson was also chuckling when you signed off on a magic loan that supposedly made half your principle disappear.

Anyone with a calculator can tell the numbers don't add up. You're either embellishing or you got scammed.

Eh, there's always the possibility they were pulling an Uber - using VC cash to subsidize unprofitable margins to try to corner a market.

Who said half the principle disappeared?

Neither the interest rate nor the term of the loan affect the principle. These only change the monthly payment amount. It's possible to have a lower monthly payment with a shorter term, depending on the interest rate.

I think you mean principal.

Would you mind just stating what the debt was, what your payments were, what your interest rate was and what the term was compared to now?

It's kind of a silly fight, and I'm sure it would help educate a lot of people reading about what is possible.

  my knowledge of finance

... apparently does not include knowing that "principle" and principal have different meanings.

You are incorrect. This is called refinancing and happens frequently. It's possible SOFI assumed his/her debt at a lower interest rate which in some scenarios could mean a lower payment and lower term. The lower rate could be due to a variety of factors including overall interest rates, a change (or different viewpoint) in creditworthiness of the debtor, etc.

Your ego and lack of financial fluency is showing - this scenario is entirely possible.

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