Article Updated January 5, 2020, to reflect the latest available interest rate information and a new customer promotion of up to $500.
One of the newer names to enter the student loan refinance marketplace is Splash Financial.
Splash Financial first entered the student loan refinance business as a lender focusing exclusively on young doctors in their residency or a fellowship. As Splash grew, refinancing was opened to all college graduates. The new program features competitive interest rates, but might not be the best choice for all student loan borrowers.
Splash Financial Basics
Splash offers both fixed-rate and variable-rate student loan refinancing and consolidation. Borrowers wishing to refinance or consolidate with Splash can borrow a minimum of $5,000, and there is no maximum. Like other legitimate lenders, there are no prepayment or loan origination fees with Splash Financial.
As shown in the table below, borrowers have a wide range of repayment lengths available. This represents a slight deviation from the more typical industry standard of 5, 7, 10, 15, and 20 year repayment periods.
|Splash Financial Overview|
|Interest Rates||1.99% - 7.06%|
|Loan Terms||5, 7, 8, 10, 12, 15, 20, and 25 Years|
|Minimum Credit Score||660|
|New Borrower Bonus||Up to $500|
Splash Interest Rates
The refinance rates with Splash are among the best in the industry.
Because Splash works with several different credit unions, they can offer a wide range of loan lengths and terms. This flexibility can occasionally create some strange outcomes. For example, Splash may offer lower rates on their 8-year loan than what they offer on a 7-year loan. For this reason, borrowers should take a very close look at the rates offered across loan types with Splash. Don’t assume that a longer loan will have a higher interest rate.
Over the past year, Splash interest rates have consistently been among the best in the market. Here again, Splash having relationships with multiple credit unions works out well for borrowers. Lenders with more limited financial resources may increase rates if the single bank they work with has a shortage of available funds. Splash can stay consistently low because they can tap into various credit unions.
Digging Deeper – Some Critical Details
To investigate Splash and other student loan refinance companies, we reached out to each lender with a survey. Splash was one of eight companies that chose to respond.
We learned the following:
- The average loan refinance with Splash was around $100,000. Most lenders tend to average $75,000.
- Splash also had a longer average loan length at 12 years. Most lenders reported approximately ten years for the average repayment length. Splash having a longer than average repayment length makes sense given that borrowers are refinancing more money with Splash and that they have the option of a 25-year loan.
- The average interest rate across all loans with Splash was 4.38%. This number may seem much higher than the lowest advertised 5-year loan rate, but Splash’s reported average interest rate was the best among the companies we surveyed.
- Splash approves 63% of applicants. Many lenders would not offer specifics on approval numbers, but among those that provided information, Splash was about average in this category.
- Splash runs credit checks through TransUnion and/or Experian.
- Less than 10% of Splash borrowers use a cosigner. Requiring a cosigner is a huge negative, and Splash was the second-best in this category.
- Splash loans are serviced by either Nelnet, PenFed, or Mohela.
- Splash will refinance most loan types. Borrowers with an associate’s degree or Parent PLUS loan can refinance with Splash. It is even possible, though not necessarily recommended, to refinance a Parent PLUS loan in the name of the student. However, Splash will not refinance loans for borrowers who do not have a degree, unless the loan is a Parent PLUS loan that was borrowed for their child.
Splash Advantages – Where Splash Financial Excels
Borrowers looking for the lowest possible monthly payment should investigate Splash’s 25-year loan. Most other lenders cap the repayment length at 20 years. By stretching things out for an extra five years, borrowers can get a lower monthly payment. This can be especially advantages for borrowers who might be buying a house soon and looking to improve their Debt-to-Income ratio. (Note: Stretching payments out over such a long period will result in considerable spending on interest, so it is often a good idea to pay more than the minimum.)
Though Splash now serves a wider audience, the specialty of Splash is still refinancing for doctors. They even offer special rates for the doctors that are still in training.
A final advantage to Splash is that they offer new customers a bonus of up to $500 for signing up. This is one of the largest bonuses currently on the market, but it is only available to those who are refinancing at least $50,000 in student debt. We think the bonus is nice, but in the long run, the rate will be the number that makes a difference in a consumer’s bottom line.
Splash Disadvantages – Some Red Flags to Review
The two major disadvantages with Splash apply to nearly all student loan refinancing companies.
First, Splash Financial offers consolidation and refinancing of federal student loans. For some borrowers, this move makes sense, but for others, it can be a mistake. When borrowers refinance federal loans, they give up perks such as income-driven repayment plans and forgiveness programs like Public Service Loan Forgiveness. For some, the lower interest rates justify giving up federal protections. For others, it is a huge mistake. Federal borrowers should carefully consider their options before refinancing loans with a private lender.
The second issue to highlight is the Splash cosigner release program. Splash advertised that a cosigner could be released from the loan after one year of on-time payments. All cosigners should understand that they are committed to the loan for the life of the loan and that a cosigner release is far from a certainty. Securing a release requires a re-evaluation of the borrower’s credit, and there is very little incentive for any lender to grant this release.
Finally, we also note that Splash is a very young company. In some cases, this can mean a great opportunity for consumers, and in others, it can be the cause of headaches. That being said, Splash works with several well-established credit unions, and the feedback we have received thus far has been largely positive.
Splash may be new to student loan refinancing, but their refinancing and consolidation products seem to be the real deal. As a result, Splash checks in at a very respectable 7th out of 18 lenders in our student loan refinance lender rankings. Borrowers looking to lock in lower student loan interest rates would be wise to check their rates with Splash to see how they stack up against other lenders.