LendKey works with local credit unions to find low rates for borrowers with less than perfect credit.
Refinancing remains risky for federal loans because it permanently erases all federal student loan benefits.
LendKey’s unique network of local banks and credit unions often results in the lowest interest rate available for many borrowers.
Other lenders may offer better interest rates.
LendKey Student Loan Refinance Review Overview
LendKey ranks very well in the Ranking of Student Sherpa Refinance Lenders because they have a long track record of approving borrowers that other lenders reject and offering low interest rates.
However, there are a few red flags with LendKey that borrowers should consider before moving forward.
LendKey Basics
LendKey offers a wide range of loans and has very competitive interest rates.
| Introducing LendKey | |
|---|---|
| Loan conditions | 5, 7, 10, 15 and 20 years old |
| Variable rate loans | 4.13 – 7.39% |
| Fixed rate loans | 2.99 – 9.93% |
| Minimum refinancing amount | $5,000 |
| New borrower bonus | $150 |
Borrowers can refinance federal and private loans with LendKey. Like most legitimate lenders, LendKey does not charge application fees, origination fees, or prepayment penalties.
How does LendKey refinance work?
The application process is same as any other lender. Borrowers fill out basic loan information and authorize a credit check. At the end of the process, LendKey matches borrowers with a local credit union which provides the funds for the loan.
This approach aims to enable small credit unions and local banks to compete on the national stage. By working together, they can reduce advertising costs, allowing them to offer the lowest interest rates in the market. However, since these are local credit unions, acceptance rates tend to be slightly higher than many national lenders.
The benefits of LendKey
Undoubtedly, the big advantage of LendKey is the lower interest rates coupled with more lenient underwriting criteria. Many borrowers are refinancing with LendKey for the first time. As their credit scores and income improve, they can refinance again with a new lender at an even lower rate.
LendKey is also announcing an interest-only repayment option for the first four years of the loan. While that sounds nice, it’s something we probably wouldn’t recommend in most cases. That said, if you’re a resident doctor or someone who’s going to be on a relatively low salary before a big planned raise, this could be a great route.
Finally, LendKey currently offers a $150 bonus to new customers. We don’t think $150 is enough to tip the scales one way or another when it comes to finding the best lenders, but it’s a nice bonus.
LendKey Refund Notice from Reddit, BBB, and Others
In preparing for the LendKey refinance review, I reviewed consumer reviews from other sources to find common complaints.
When researching lenders, consumer complaints are expected. The main red flags arise if the same complaint keeps coming or if there is an unexpected number of complaints from borrowers. I haven’t observed any of these red flags with LendKey.
Here is what I found on various resources:
The Consumer Financial Protection Bureau (CFPB) – The CFPB Complaints Database LendKey seems pretty standard. LendKey has more complaints than some lenders, but not a worrying amount. The most common issues raised were from borrowers who had issues with payment processing and were experiencing late payments due to financial difficulties.
The Better Business Bureau (BBB) – For a lender in business for a long time, I was surprised to see only six customer complaints on the BBB site. Most complaints came from people whose applications had been rejected, but this trend applies to most lenders.
Reddit – Looking through Student loans subreddit posts on LendKey, most people seemed happy with LendKey and pleased with the interest rates offered. One person complained about how long LendKey took to process payments, which was also an issue raised in the CFPB database.
Sherpa Readers Student Loan – 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 would also add that when I have personally helped readers shop, LendKey’s approval rates and offered interest rates have been very competitive. They are often 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. Since there is no way to “cancel” a student loan refinance, it is essential that borrowers know if combining their federal and private loans is a good idea.
Borrowers who are worried about possible job loss or reduced income in the future would do well not to refinance their federal loans. Federal loans come with protections for borrowers that no private lender can match.
Switching from one private lender to another does not involve the same risk. Borrowers with private loans can use refinance to lock in lower interest rates and lower monthly payments. For this reason, it is often advisable to refinance only private loans.
LendKey: Frequently Asked Questions
Yes. LendKey has been in business since 2009 and does not engage in shady practices such as charging loan application fees or prepayment penalties.
Checking rates with LendKey does not result in an increase in credit. The initial rate check is “gentle” and does not affect your credit score.
If a borrower decides to refinance with LendKey, there is a rigorous credit check. This is the procedure used by all refinance lenders.
If you are looking for student loans, LendKey is a company worth considering.
Ultimately, whether or not LendKey is a good option will depend almost entirely on interest rates. Click here to check rates directly with LendKey.