It’s hard to overstate the importance of shopping around to find the best student loan refinance lender.
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 Shop In Under an Hour
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. I recommend the following three steps:
- 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.