Have you heard about LendKey and are wondering what it can do for your student loan debt?
This Lendkey review will look at its student loan refinance options, how they work, what the benefits are, and if they’re right for you.
What Is Student Loan Refinancing?
With Lendkey student loan refinancing, you’re taking your existing student loans, whether that’s multiple loans or one loan, and consolidating them into one student loan with Lendkey to save money. By refinancing to a private marketplace, you stand to get a better interest rate.
Refinancing makes a lot of sense for people who have a secure income and good credit because a lot of companies are bidding for their business. It’s a competitive market that’s hungry to score new business. That means you’ll be able to get a great rate for your refinance.
But you might be wondering how you’ll save enough to make it worth your while. You’ll save money in one of two ways with a Lendkey student loan:
- You can save money by shortening the life of the loan. If your current loan still has another 15 years on it, you could consider dropping that term down to 10 years or even shorter under the refinance. Because your Lendkey loan would have a lower interest rate if you agree to a refinance, you’ll be able to shorten the length of the loan without driving up your monthly payment much, if any.
- You can lower your monthly payment. If your main concern right now isn’t how many years you’ll be paying on your loan, but how much you’re forking over every month, you should look at lowering your payment instead. That will free up some of your cash each month, and you can easily do it by lowering your interest rate. That’s an attractive possibility for graduates with interest debt.
Not sure if refinancing is right for you? I wrote a detailed guide to the process, which you can find here: Should I Refinance My Student Loans: Pros, Cons & Best Lenders
Who Shouldn’t Refinance Their Student Loans?
All Lendkey student loan reviews should mention who shouldn’t look at a refinance. And although there aren’t many circumstances that fit into this category, there are two. Let’s examine those situations and see if they apply to you and your current circumstances.
Consideration #1: Income Driven Repayment & Public Service Loan Forgiveness
People who currently have federal student loans may want to think twice if they need income-driven repayment or public service student loan forgiveness. You won’t be able to get either one with a Lendkey student loan.
Income-driven repayment is an attractive option for borrowers who have racked up hefty student loans but don’t have high-paying jobs.
And if your income never rises by much, neither will your student loan payment. At the end of the repayment period, if you still have a student loan balance remaining, it will be forgiven.
That’s why if you don’t anticipate a high salary at any point in your career and you have federal student loans, it may NOT make sense to refinance through Lendkey if you can opt for an income-driven repayment scenario (Learn more about income-driven repayment).
If you’re eyeing the public service student loan forgiveness program, you also shouldn’t refinance with Lendkey.
This program lets certain workers, including the military, teachers, government employees, not-for-profit staff, and social workers, have certain loans forgiven, provided they’ve made 10 years of on-time payments to the loan.
That can be a life-changing program for those people and if you’re trying to land public service student loan forgiveness, you shouldn’t move your loans to Lendkey because then you wouldn’t be eligible.
But you should be aware that some people who believe they are doing everything right for that program are still sometimes denied payments. There are a lot of technicalities to the program that are incredibly complicated to understand.
And not all of a person’s loans are necessarily eligible – if you have multiple loans you may find one is eligible for forgiveness, while your others aren’t. You should thoroughly investigate your loans to see if you have any that won’t qualify no matter what you do.
If you have non-qualifying loans, you can always move those into a refinance through Lendkey while leaving your qualifying loans in place.
Consideration #2: Unemployed & Poor Credit Score
Borrowers who have bad credit scores and no income also shouldn’t refinance their student loans through Lendkey. Because they aren’t the most desirable candidates, companies aren’t bending over backward to attract their business. Even if they can manage to secure a loan, it won’t be at a great interest rate so refinancing wouldn’t make sense for them financially.
If that sounds like you, the good news is that with some hard work, you can improve your credit score so you’ll qualify for some of these better rates.
To do that, you should start paying your bills on time, work to lower your credit card debt if you have any, and find secure, full-time employment. It’s going to take time to improve your credit score, but it will steadily go up once you take the necessary steps. Once it has improved, you may be able to get the loan you were denied just a few months earlier.
It’s worth the effort because the average person saves thousands of dollars with a student loan refinance through Lendkey.
How Lendkey Works
Lendkey is a marketplace for basic credit unions and community banks who want to list their rates to attract student loan borrowers. It makes sense for them to all try to land business through Lendkey because when you have so many lending options in one place, borrowers will flock to it.
In that sense, it operates very similar to travel websites like Kayak and Priceline. Lenders upload their rates and qualifications and LendKey aggregates them into an easy-to-use search engine.
To see what kinds of rates you may qualify for, all you have to do is type in basic information about yourself. It’s quick and easy to see what kind of rates you can land and it won’t impact your credit score, which is a big relief for people who are worried about seeing a ding on their report.
Once you see the preliminary offers you may qualify for, you’ll choose one that most interests you. Then you’ll fill out the full application to get approved by the bank of your choice.
Once you’re approved, you’ll choose a loan term and watch the savings begin.
Benefits of Lendkey
Using Lendkey to refinance student loans is an easy process. Doing business with Lendkey comes with a number of benefits:
- They have more than 280 banks and credit unions on their platform. It would take you a long time to individually compare the rates from all those businesses. But with Lendkey, they are all in one easy-to-access place. And they’re a good mix of businesses, with some national banks and some community banks.
- There are no fees to check or originate a loan. Some other lending sites or businesses will charge fees for this, and sometimes they are hidden, making for an unpleasant surprise for you.
- There is no pre-payment penalty in case you want to pay off your loan early. That’s a great feature to have in case your career takes off. If you can retire that debt early, you’ll likely want to – and you don’t want to have to pay a penalty for being financially responsible. None of the lenders on Lendkey will charge a pre-payment penalty, so you won’t have to examine each lender’s fine print to spot which ones would. It’s nice to know that upfront.
- You can apply with a co-signer. If you don’t have a stellar financial history behind you and you still want to pursue a refinance with Lendkey, you’ll be able to do it if you enlist the help of a co-signer. Co-signers will be obligated to back the loan payments in case you stop making payments, so it’s a big responsibility for them to take on. Not everyone will be lining up to be your co-signer. A safe bet is usually a parent, provided they know you’re financially stable to begin with so they won’t mind co-signing.
- Lendkey handles undergraduate and graduate loans. This is a nice perk since a lot of other places only do refinances on undergraduate loans.
Lendkey Review Summary
Provided you aren’t interested in the programs your federal student loan can offer you, and you have a good credit score and secure job, Lendkey is a great option when it comes to refinancing your student loans.
Even if you decide not to go with Lendkey, it’s still worth checking out. It’s a great way to start your search for better loan terms, and it won’t hurt your credit score to check it out.
And since it’s free to check, there is no downside to doing it. All you’ll be out is a few minutes of your time, and you stand to save thousands of dollars.