LendKeyHave student loans? Have you realized it may be time to refinance? You know you’re grown up when you are not only willing to undergo this process, but also feel a need to do the proper amount of research beforehand.

It’s rather commend-worthy, as anything that revolves around percentages, APRs, and rates is often enough to make most people zone out and drop the ball completely.

But believe it or not, making an informed decision doesn’t have to require you to read through hundreds of hours of lending wikis. Any job worth doing requires a tool, regardless of your experience level. For refinancing student loans, the tool even experts use is LendKey.

Never heard of it? It’s time you did.

What kind of company is LendKey?

First off, let’s talk about what LendKey is not. LendKey is not a lender. It never has been. Instead, LendKey connects people with a multitude of lending institutions. In a sense, it’s the Travelocity of loans.

However, LendKey does not connect borrowers with huge chains such as Wells Fargo, Bank of America, or Chase. Instead, it connects borrowers with smaller chains because it believes that they offer better services overall. These lenders are community oriented and often not-for-profit credit unions.

What does LendKey do?

With some pretty powerful data analytics engines, LendKey is able to pull data from over 275 community based financial institutions. It then compares and contrasts them and presents its findings from best to worst to consumers. This means the average person is able to look at his or her options and come to the same conclusion as a professional loan consultant would.

In the company’s own words, they state that their aim is to “[match] consumers with community banks and credit unions to create the most transparent, accessible and low-cost borrowing options in online lending.” Online customer satisfaction surveys places them around 4 ½ out of 5 stars, so they seem to be doing a pretty good job of doing just that.

Who is LendKey best for?

In order to refinance, you need to have a degree. LendKey is not just for refinancing, though.

They can also help you find a loan to go to school, or it can connect you with the best home improvement loan. Need a personal loan or car loan? Refinance through LendKey, and services like this will become available to you through certain vendors.

How do I qualify to use LendKey?

Unfortunately, LendKey does have some minimum qualifications. Applicants should aim to have a credit score of at least 660 and have an annual income of at least $24,000. Although none of these things are stated on their website, these standards have been inferred by customers.

Typically, however, borrowers who work with LendKey have a 728 credit score, and make around $70,000 a year. But again, this doesn’t mean you’ll be turned down if you don’t have these things.

What are some of LendKey’s specifics?

If you are looking to refinance with LendKey, you can refinance your student loans with debts ranging from $7,500 to $250,000. Any less than $7,500 and you’ll have to look elsewhere for a smaller loan.

The loan terms can vary from five, ten, or fifteen years. Generally speaking, the shorter the loan term, the higher your monthly payments will be. However, you will benefit from a lower APR, so more of your monthly payment goes towards the actual balance.

LendKey's website

With a longer loan term, the reverse is generally true. You’ll have a higher APR, but less of your monthly payment will go towards the principal. On the bright side, your monthly payments will be lower.

Fixed APR rates presently range from 3.15% – 7.26%, whereas variable rates range anywhere from 2.58% – 6.32%. Take a quick look at the pros and cons of each.

What is the difference between a fixed interest rate and a variable interest rate?

As you might expect, having a loan with a fixed rate means that the rate never changes throughout the life of the loan. A variable rate may change month to month depending on what the lender is able to offer. Variable interest rate loans are a risk for borrowers because they don’t know what their payments are going to look like well ahead of time.

Interest rates may be high, or they may be low, so there is a certain degree of risk involved. If you can accept that, however, there is the possibility you may save money in the long run, even though some months will be high.

Are all LendKey lenders available to all borrowers?

Some borrowers will have access to certain lenders that other borrowers won’t in certain geographical areas (remember, they connect borrowers with lenders near them).

Why the disparity?

Lots of reasons. Limitations or qualifications can range from anything such as the type of work you do to where you live. They also take into account your loan amount, whether you have served in the military, and of course your credit score and income level.

However, no matter where you live or work, if you qualified on minimum income and credit score criteria, you will likely see at least 2 to 3 lenders – that’s a minimum no matter where you are. Regardless of what sort of profile you fit in, LendKey will find you the best lenders that want to work with you.

What is the LendKey process?

Once you complete a profile, lenders compete for your business. If and when you choose a loan, the new loan goes through the bank, NOT LendKey; however, LendKey will handle the origination and servicing.

LendKey does not share your information with lenders until you’ve selected the loan you want. You will never be treated like a “lead” and your information will not be sent to multiple lenders like other loan comparison sites do.

For most loans, borrowers become a customer of the bank but will still be able to manage their loan through LendKey. Moreover, LendKey also handles any questions regarding the new loan — but the bank will, too, if you prefer to go through them.

Why would you want to work with a community bank or credit union?

Though national lending institutions are able to offer things smaller lenders are not, they fail borrowers on a variety of fronts. For one, local banks and credit unions are, as a whole, much more service-oriented than national chains. Hate calling an 800 number and speaking to a robot for five minutes? Smaller lenders know this and get you in contact with a person as fast as possible.

Don’t think that the interest you would get with a smaller company would be higher than what you would get with a larger one. The numbers simply don’t support this. Smaller lending institutions are often able to offer better rates with lower monthly payments.

Plus, many of them offer borrowers the option to only pay interest for four years if they can’t afford to make payments on both interest and principal. Think of it as an option that allows you time to get back on your feet.

Is it possible to refinance federal and private loans together through LendKey?

Yes, LendKey connects borrowers with smaller lenders and credit unions, so if you want to refinance both federal and private loans, you will do so through a private lender. As with any refinancing option, you’ll lose any loan forgiveness or income-based repayment plans with your federal loan if you choose to refinance.

Is there a difference between consolidating and refinancing?

There is a difference! And it’s actually quite a big one.

When you consolidate your loans, the only real thing you’re doing is combining all of your loans into one payment. The total amount owed and the interest will be the same. The only real benefit is that you don’t have to remember to make multiple payments each month. Make one payment and you are done.

Refinancing is a different story. When you refinance, you are consolidating your loans, but you are getting a new interest rate and a new loan term. On top of all that, you are also apt to get a new monthly payment amount (which is usually lower than what you were paying before, but it is not 100% guaranteed).

Are there penalties for paying off a loan early?

Whereas larger banks often penalize borrowers for paying off a loan too early, community banks and credit unions won’t do this through LendKey. If you want to pay off your loan early and move on with your life, you’re free to do so.

Can you cosign a loan through LendKey?

If your credit score and income level are a tad low to meet lender requirements, it is possible to cosign on a loan. Obviously you want someone with strong credit, and the co-signer must be willing to have a hard credit check on his or her account.

This isn’t the biggest deal, but if an account has multiple hard credit checks on it, that person’s credit score will lower slightly as a result. Another thing to consider is if you stop making payments for whatever reason on the loan, your co-signer will then become liable for the loan. However, if you make 12 months of successful payments on time, then your co-signer can then be released from the contract.

Obviously if you’re going to co-sign a loan with someone, you both need to talk about ‘what-if’ scenarios and know what the plan is should you not be able to make payments. Don’t ruin a lifelong friendship over money.

How do you apply for a refinancing loan through LendKey?

Luckily, it doesn’t take long to set up an initial account with LendKey and start looking at quotes from community based lenders and credit unions. Do know that you may be asked to provide proof of certain statements, such as a pay-stub or scan of your driver’s license. However, that comes later once you have decided to go with a certain lender.

To start off, you’ll need to provide the following information:

  • Full name
  • Physical address
  • Email address
  • Phone number (landline or cell)
  • Your total yearly income
  • Loan amount you are pursuing
  • Loan Type
  • School Information

Once you submit your information LendKey begins a soft credit inquiry, which won’t affect your credit score. After this you’ll get lender options in your area and, if you choose, you can filter out results depending on interest rate and loan term.

If you like a lending option and want to proceed, you can elect to move forward. At this point a hard inquiry will be conducted. Just remember that too many of these in a short amount of time will affect your credit score.

To lower your interest rate even more, you can sign up for automatic payments and lower your rate by 0.25%. If your financial situation is stable and reliable, definitely do this! It will save you money in the long run — which is the reason you’re doing this in the first place, right?

Why is LendKey a smart choice?

  1. You are supporting local business. Whenever you support a local business, your community gets stronger as a result.
  2. The rates are often better than large-scale financial lending institutions.
  3. You’ll get better customer service via LendKey and whatever lender you choose to go with.
  4. If you co-sign with someone, that person is released from the contract after only one year of on-time payments (sign up for those automatic payments if you can!).
  5. You are not penalized for paying back the loan early.
  6. There are no origination fees to refinance your loan.
  7. If you become unemployed and your chosen lender agrees, it’s possible to stop payments for as long as 18 months — this is unusual in the private sector. If you do have to do this, just make sure you know what the deal is on interest. Will it continue accruing? If so, when you start making payments agan, your payments may be larger than they were before you stopped.