LendKey Student Loan Consolidation Review

Michael Lux Blog, Consolidation, Student Loan Consolidation Reviews, Student Loans 5 Comments

Updated 10/3/17 to include $150 signup bonus information and the latest interest rate information) LendKey is a bit of an oddity in the student loan consolidation and refinancing marketplace.  Most lenders fall into one of two groups.  Group one would be the startups like SoFi and CommonBond that are newer companies with low interest rates, but they lack a local presence or longstanding reputation.  Group two would be established banks and lenders like Wells Fargo or Citizens Bank.  These companies have higher interest rates, but borrowers are able to visit a local office when they have questions or concerns. LendKey attempts…

LendKey Refinancing

Interest Rates
Co-Signer Release
Loan Terms
Repayment Length

Great

LendKey matches you with a local not-for-profit credit union to consolidate your student loan. The result is low interest rates, but better approval chances.

Updated 10/3/17 to include $150 signup bonus information and the latest interest rate information)

LendKey is a bit of an oddity in the student loan consolidation and refinancing marketplace.  Most lenders fall into one of two groups.  Group one would be the startups like SoFi and CommonBond that are newer companies with low interest rates, but they lack a local presence or longstanding reputation.  Group two would be established banks and lenders like Wells Fargo or Citizens Bank.  These companies have higher interest rates, but borrowers are able to visit a local office when they have questions or concerns.

LendKey attempts to offer the best of both worlds.  Their interest rates are presently the lowest we have ever seen, but at the same time, borrowers are matched with a local community bank who actually provides the loan.

The LendKey approach to consolidation has some major advantages, but there are also a few negatives that should be cause for concern for a number of borrowers.  Due to LendKey’s low interest rates and and high customer satisfaction, LendKey checks in at third place is our Student Loan Refinance Company Rankings.

How does it work?

The application process is identical to any other lender.  Borrowers fill out basic loan information and authorize a credit check.  At the end of the process the borrowers are matched with a local credit union that will ultimately be providing the funds for the loan.

The goal behind this approach is to allow smaller credit unions and local banks to compete on a national scene.  By working together, they can reduce advertising costs, which allows them to offer the lowest interest rates on the market.  However, because they are local credit unions, acceptance rates tend to be slightly higher than many of the national lenders.

The LendKey Pros

Without question the big advantage to LendKey is the interest rates that start at 2.58% and the more forgiving underwriting criteria.  The 2.58% is currently among the lowest advertised price on the market.  Additionally, the fixed-rate loans with LendKey start at 3.15%, which is the best on the market.  With fixed-rate loans so close to the variable-rate loans, many borrowers would be wise to lock in a low fixed-rate loan for the length of their repayment.

As with any reputable lender, LendKey offers no origination fess with their loans, nor is there any prepayment penalty.

LendKey also advertises an interest-only repayment option for the first four years of the loan.  While it sounds nice, it is something we likely wouldn’t recommend for most circumstances.  That being said if you are a resident physician or someone who will have a relatively low salary before an expected major hike, it could be a nice route.

Finally, LendKey is currently offering a $150 bonus to new customers.  We don’t think $150 is really enough to tip the scales one way or another when it comes to finding the best lenders, but it is definitely a nice perk.

A Warning…

LendKey consolidates private loans with federal government loans.  Going this route makes sense in some circumstances, but in others, it could be a huge mistake.  Because there is no way to “undo” a student loan consolidation, it is essential the borrowers know whether or not combining their federal and private loans is a good idea.

The Bottom Line

If you are shopping for student loans, LendKey is a company that deserves some serious consideration.  With interest rates supposedly on their way up, now might be the best time to consolidate your loans.  Ultimately, whether or not LendKey is a good option will depend almost entirely upon the interest rate you are to qualify for.

  • Students loans are much more complicated than I realized. There is so many choices and pitfalls. Thanks for the information.

  • Chad Donald

    Lendkey was very disorganized with my application. They pulled my credit as well as my cosigners and did not give me an offer, call me back, or return any of my calls. Avoid at all costs!

  • carl calabrese

    Can you consolidate your private loans but not your federal?

  • danielle

    Lendkey reps were always pleasant while speaking with them, but nobody could give me the correct answer about my loans. It took way too long for lendkey and nelnet to communicate leading to a high principle amount because of the time it took to switch over.
    I also was told that when paying extra, it would be separate from my automatic monthly payment. this was also not true. Their website takes >/= 1 week to become accurate after payments and is not very user friendly.
    The low interest rate was nice but the website is inconvenient and if you plan to pay your loan off faster than intended with automatic payments, don’t choose lend key. Because I paid extra towards my loan my automatic monthly payment was lowered, therefore making it even more difficult for me to knock down the principle amount.
    thumbs down honestly, and I rather have stuck with Nelnet and paid extra than have switched to lendkey.