LendKey Student Loan Refinance Review Overview

LendKey ranks highly in the Student Loan Sherpa Refinance Lender Rankings because they have a long track record of approving borrowers that other lenders reject and offering low interest rates.

However, there are some red flags with LendKey that borrowers should review before moving forward.

LendKey Basics

LendKey offers a wide range of loans and has very competitive interest rates.

Borrowers can refinance both federal and private loans with LendKey. Like most legitimate lenders, LendKey does not charge application fees, origination fees, or prepayment penalties.

How does LendKey Refinancing work?

The application is just like with any other lender: you provide some basic loan details and agree to a credit check. After that, LendKey connects you with a local credit union that actually gives you the loan.

This method helps small credit unions and local banks compete nationwide. By joining forces, they cut down on advertising expenses, which lets them offer very low interest rates. However, since these are local credit unions, they often have a bit higher acceptance rates compared to big national lenders.

The LendKey Pros

LendKey stands out mainly because it offers lower interest rates and easier approval criteria. Many people choose LendKey for their first refinancing. As their credit scores and incomes get better, they might refinance again elsewhere to get even lower rates.

LendKey offers the option to only pay interest for the first four years of the loan. While this might seem attractive, it’s generally not recommended. However, it could be a good choice for someone like a resident physician who expects to earn a lot more money later on.

LendKey also has a $150 bonus for new customers. While $150 might not be a deciding factor in choosing a lender, it’s a nice extra.

LendKey Refinance Reviews from Reddit, the BBB, and Others

In preparing the LendKey refinance review, I looked at consumer feedback from other sources to find common complaints.

When researching lenders, consumer complaints are expected. The major red flags come if the same complaint keeps coming in or if there are an unexpectedly large amount of borrower complaints. I observed no such red flags with LendKey.

Here is what I found at various resources:

The Consumer Financial Protection Bureau (CFPB) – The CFPB database on LendKey complaints looks fairly standard. LendKey has more complaints than some lenders, but not a concerning amount. The most common issues raised were from borrowers who had problems with payment processing and falling behind on payments due to financial hardships.

The Better Business Bureau (BBB) – For a lender that has been in business for a long time, I was surprised to see only four customer complaints on the BBB site. Some of the complaints were from people with rejected applications, but this trend applies to most lenders.

Reddit – Looking through the student loans subreddit posts about LendKey, most people seemed satisfied with LendKey and pleased with the interest rates offered. One person did complain about the time it took LendKey to process payments, which was also an issue raised in the CFPB database.

Student Loan Sherpa Readers – In general, reader feedback on LendKey is somewhat limited compared to other lenders. Generally speaking, fewer reader comments with complaints is a positive sign. I’d also add that when I have personally helped readers shop around, LendKey approval rates and offered interest rates have been very competitive. Often they are the best on the market.

A Warning About LendKey and Others…

LendKey refinances private loans with federal government loans. Going this route makes sense in some circumstances, but it could be a massive mistake in others. Because there is no way to “undo” a student loan refinance, it is essential that the borrowers know whether combining their federal and private loans is a good idea.

Borrowers who are worried about a possible job loss or income reduction in the future would be wise not to refinance their federal loans. Federal loans come with borrower protections that no private lender can match.

Switching from one private lender to another does not carry the same risk. Borrowers with private loans can utilize a refinance to lock in lower interest rates and lower monthly payments. For this reason, it is often advisable to only refinance private loans.

LendKey: Frequently Asked Questions

The post LendKey Student Loan Refinance Review appeared first on The Student Loan Sherpa.

Many readers have asked me about who the best lender is or what lender has the lowest interest rates. Focusing on the best lender or the lowest advertised rate doesn’t work. One lender might be an excellent choice for some borrowers but a massive mistake for others.

I’ve seen countless borrowers apply to just one or two companies when refinancing. This is a mistake.

Today I’ll cover the importance of shopping around and explain how to do it in less than an hour.

What Does it Mean to Shop Around for a Student Loan Refinance Lender?

If you were shopping around for a book, you would check prices with several stores and then buy it from the store with the best price.

Shopping for student loan refinancing is a bit more complicated because each customer gets offered a different deal. Lender A might offer you an excellent rate, but your friend might get a terrible rate. Yet, with lender B, the reverse is true.

In student loan refinancing, the lender that offers the lowest interest rate may not be the lender that advertises the best interest rate.

Thus, if a borrower wants to find the best option, they have to actually check rates with multiple lenders to find the lowest rate offered.

Will Shopping Around to Hurt My Credit Score?

The biggest fear for borrowers rate-shopping is that it will hurt their credit score.

As consumers, most of us have had it drilled into our heads that too many credit checks hurt our credit score. Fortunately, rate shopping usually means multiple credit inquiries are treated as a single pull. Whether you investigate one lender or 12, the impact on your credit score is identical.

It is usually recommended that borrowers rate shop within a 30-day window. However, some credit models limit this window to 14 days, so the best practice is to spend less than two weeks rate shopping.

Fortunately, the actual time spent checking rates takes significantly less than two weeks.

Rate Shopping Doesn’t Take Long

Checking rates with just a single lender takes about 10 minutes, but it takes a bit more time to shop around.

If you wanted, checking rates with every single national lender would take about 2 or 3 hours. Those interested in the comprehensive approach can find a list of national student loan lenders here.

However, it’s possible to thoroughly shop around in less time.

Rate Shop In Under an Hour

• Check rates with the lenders advertising the best rates. We know that the best rate offered and the lowest advertised rates can be different, but investigating the lenders offering the best rates is a good starting point.
• Check rates with the top companies. On this site, I constantly update lender rankings based upon my research feedback received from borrowers. The lenders at the top of the rankings are the ones I deem most likely to approve a broad cross-section of readers and give them a good rate. The current rankings are available here.
• Check rates on a couple of lending platforms. Some “lenders” are actually networks of lenders. So a single rate check means checking rates with several different companies. For this reason, I’d make sure to always check rates with the following companies:
  • LendKey – Small banks and not-for-profit credit unions use LendKey to offer student loan refinancing. LendKey matches borrowers looking to refinance with local lenders. This allows smaller banks and credit unions to compete with larger companies. It also gives borrowers the chance to check rates with multiple smaller local banks at the same time.
  • Splash Financial – Splash works with an extensive network of lending partners, including many top national lenders. Checking rates with Splash is an efficient way to shop around in little time.
  • Credible – Like Splash, Credible has a large network of lenders. Surprisingly, there is little overlap between the Splash network and the Credible network. For borrowers, this means two applications check rates with many different lenders.

Utilizing the above resources, borrowers can spend less than an hour rate shopping and cover a ton of ground.

The post Why Should I Shop Around for Student Loan Refinancing? appeared first on The Student Loan Sherpa.

At present they are both ranked in the top ten in our student loan refinance rankings. What separates these lenders?

SoFi vs. LendKey Basics

Variable-Rate Loans	5.31 - 9.12%	5.99% - 9.99%
Fixed-Rate Loans	4.89 - 9.04%	4.49% - 9.99%
Loan Terms	5, 7, 10, 15, and 20 Years	5, 7, 10, 15, and 20 Years
Minimum Loan	$5,000	$5,000
Signup Bonus	$150	NA

Interest rates and loan terms are quite similar for both lenders.

Arguably the biggest difference between the two companies is their structure. SoFi is a financial services tech company and LendKey works with a vast collection of banks and local credit unions.

Like all legitimate lenders, neither company charges loan origination fees, application fees, or prepayment penalties.

The LendKey Edge

LendKey’s edge comes from the fact that they work directly with local banks and credit unions.

These smaller local institutions have a desire to create lasting financial relationships with local college graduates. Because many of the credit unions are not-for-profit, they are able to offer lower interest rates than most national lenders.

[Further Reading: LendKey Student Loan Refinance Review]

SoFi’s Edge

SoFi originally started out as the “premium” student loan refinance company. They had the best rates, but these rates were reserved for people with excellent credit scores and debt-to-income ratios. This left many borrowers with less than perfect credit upset over being rejected.

However, for SoFi to grow as a lender, they had to be willing to accept more than just high earners with perfect credit. SoFi has largely accomplished this goal. As a result of the growth of SoFi, borrowers are now much more likely to be approved, and more likely to get a preferable interest.

SoFi has also expanded far beyond student loans. They now offer personal loans, mortgages, and wealth management services. These other financial services can be far more profitable than student loan refinancing. This creates a huge incentive for SoFi to offer low interest rates to establish a relationship with as many borrowers as possible. Even if a borrower has no interest in any of these services, the fact that SoFi offers them gives SoFi a reason to provide quality service in hopes of getting a borrower to sign up for more SoFi financial products.

In our In-Depth Review of SoFi, we also noted that SoFi offered a job placement program for borrowers. The bet that SoFi is making is that they will make more money by investing in their borrowers and helping them find jobs than they would if customers were left to struggle on their own.

SoFi vs LendKey: Loan Details

As an incentive for new borrowers, LendKey also offers $150 to borrowers who sign up for their service.

One item that all borrowers should understand is that both lenders are willing to refinance or consolidate federal government student loans. The advantage to borrowers is that it allows them to lock in lower interest rates. The danger is that federal perks like income-driven repayment plans and student loan forgiveness programs are gone forever if they refinance.

Ultimately, from a loan term standpoint, there is very little that separates these two lenders.

SoFi vs. LendKey: Interest Rates

The one number that matters to all borrowers is interest rates.

Both lenders consistently offer excellent interest rates.

The advertised interest rates in all categories are currently very close with these two lenders. Borrowers looking to find the best deal would be wise to apply with both to find the company that actually offers the lowest interest rate.

Click Here to check your rate with SoFi.

Click here to check your rate with LendKey.

The post SoFi vs. LendKey: Picking the Better Refinance Company appeared first on The Student Loan Sherpa.

In our student loan rankings, we provide a template for sorting through the various companies, but it isn’t an exact science. The reality is that the best student loan refinance lender is usually the one offering the best interest rate.

SoFi, Laurel Road, LendKey, Earnest, Citizens, and Splash are the lenders that most frequently appear in these reader emails. This makes sense because these lenders spend the most on advertising and offer some of the best interest rates in the student loan consolidation business.

Advertised Rates vs. Actual Interest Rates

If there is one concept that anyone shopping student loan refinance companies should understand, it is the difference between advertised rates and actual interest rates.

Advertised interest rates vary from company to company and can fluctuate based upon the market and cost of borrowing. Most of the top lenders will all be within a fraction of a percent of each other. However, just because a company advertises the lowest interest rate, it does not mean that it will offer any particular borrower the best interest rate.

Actual interest rates depend upon a number of different factors. The potential borrower’s credit score, income, debt-to-income ratio, occupation, and school all can be considered.

However, each lender may treat these factors differently. For example, Earnest also considers your retirement account balances. From their perspective, if you are saving a ton of money for retirement at a young age, it is a sign you are probably a responsible borrower. Each company guards its exact formula closely.

Lenders make money by offering the best rates to the consumers who are the lowest risk. The better they do identifying these consumers, the more money they will make.

What this means for you the borrower is that each lender will apply your particular information to their credit evaluation formula. SoFi may decide you are too much of a credit risk and decline your application or offer you a higher interest. Meanwhile, LendKey might look at exactly the same information and conclude that you are a safe bet, and offer you their lowest interest rate. Because each borrower is different and each lender looks at borrowers differently, it is impossible to know what lender will have the best rate.

A final factor that should be considered is the term of the loan. Laurel Road might offer an excellent rate on a short-term variable-rate loan, but the long-term fixed-rate loan might come with a really high interest rate. Meanwhile, Splash could do the opposite. Their fixed-rate loans might be the best deal, but their variable-rate offers don’t hold up. The only way to know what a lender will offer and what deal you can get is to apply.

Shopping Around

The extended discussion about advertised rates vs. actual rates is necessary to explain the importance of shopping around.

When it comes to student loan refinancing, that means applying with a number of companies to find the best deal.

The major credit bureaus encourage shopping around because multiple credit inquiries are treated the same as a single check, so long as they were within 14 days (some even give you longer). This means that the only downside to applying to multiple lenders is the time it takes to fill out the applications. It may be a bit of a headache, but the potential savings make it time well spent.

Those concerned about the time commitment required to shop around should estimate that it takes about 10 minutes per lender to check rates.

We have prepared a full list of lenders in our rankings and also included links to current promotions with most lenders.

What is the point of Rankings?

The rankings should be useful for a couple of reasons.

First, it provides a starting point for your research. Having all the companies in one place provides a guide for where you should go when shopping around.

Second, it is helpful when comparing the offers two companies have made.

Suppose SoFi and Citizens both offer the same interest rate for your consolidation. Part of the reason SoFi is ranked number one is because of its favorable cosigner release terms and because of its career development opportunities for borrowers who lose jobs. This gives them the edge in our rankings, so if the interest rates are close, it is a good tie-breaker.

Bottom Line

Finding the best student loan company is all about doing a little bit of extra legwork.

There are some differences between SoFi, Laurel Road, LendKey, Earnest, Citizens, and Splash, but at the end of the day they are all offering similar services and the best choice is typically the lender with the best rate.

The extra effort to find the best rate is minimal and it pays off.

Put together a list of lenders you are considering. Send out applications to each lender. Evaluate who has the best deal. Compare how the companies did from a customer service perspective. By the time you have offers and experience with the lenders, you should know what lender is best for you.

Shopping around in this manner will ensure that you save as much money as possible. At present, these lenders are advertising the lowest interest rates.

The post Deciding Between SoFi, Laurel Road, LendKey, Earnest, Citizens, and Splash appeared first on The Student Loan Sherpa.