In our student loan refinance rankings, Splash Financial ranks first, and CommonBond is in second place. What makes these lenders better than companies like SoFi, Earnest, and others? How should a borrower decide between Splash and CommonBond?
Splash Financial and CommonBond both rank well for two reasons: 1) They offer excellent interest rates, and 2) They approve a large percentage of applicants.
That being said, Splash and CommonBond are not the best choices for all borrowers. There are also some significant differences between the two lenders. These differences may have a considerable influence on borrower satisfaction.
The Basics: Splash vs. CommonBond
|Interest Rates||1.74% - 6.52%||1.98% - 7.04%|
|Loan Terms||5, 7, 8, 10, 12, 15, 20, and 25 Years||5, 7, 10, 15, and 20 Years|
|Signup Bonus||Up to $500||$150|
The interest rates and loan durations with both lenders are similar. Splash has a slight edge due to the 25-year loan option and lower starting interest rate.
What this table doesn’t show is how competitive CommonBond is with Splash across the various rate options. Splash offers a better rate on a 5-year variable-rate loan, but borrowers looking for a 10 or 20-year loan will see that CommonBond has lower advertised rates in these categories. To see the best rates in various loan categories, check out this table.
From a terms and conditions standpoint, the lenders are again pretty close. Like most legitimate lenders, there are no prepayment, origination, or application fees with Splash or CommonBond.
The big danger with both lenders is refinancing federal government loans into private student loans. This process is standard procedure in the refinance industry, but that doesn’t mean it is a good decision for all borrowers. If you need, or might someday need, the federal borrower perks and protections, refinancing is probably a mistake.
The most significant advantage to refinancing with CommonBond is their 0% APR intro-rate promotion. CommonBond seems to recognize that borrowers with federal student loans have a pretty good deal right now. The interest rate on federally-held student loans is currently a 0% interest rate due to Covid-19. To compete, CommonBond is offering six months of 0% interest on new loans that include at least one federal student loan. This is a unique promotion and something we are unlikely ever to see again. To qualify, borrowers need to apply through the standard CommonBond application. If approved, they will have the option of selecting a 10-year or 20-year loan with a 0% introductory rate.
Beyond the temporary benefits, CommonBond tries to position itself as a consumer-friendly lender. CommonBond places a huge emphasis on the quality of its customer service. This emphasis on customer service doesn’t always translate to a positive outcome, but it certainly increases the odds of a smooth experience.
For socially-conscious borrowers, CommonBond partners with Pencils of Promise to provide resources to students and teachers in the developing world. The CommonBond team also makes a yearly trip to Ghana to help build classrooms.
Splash Financial Advantages
One of the big factors that drives interest rates up or down is lender capital. If a refinance lender has a lot of cash on hand to issue loans, they will lower interest rates to attract more borrowers. They may also loosen up approval standards. The opposite is also true. If a lender is low on cash, it may become harder to get approved and get a low rate.
Splash sits at the top of our rankings because they have found a way around this issue. Splash works with a variety of funding sources. The end result is that Splash can offer lower interest rates and approve more borrowers.
The other big advantage to Splash is the $500 new customer bonus. Unfortuantely, this huge bonus is only available to borrowers who refinance more than $50,000 in student loans. If you do the math, you will see that the lender offering the lower interest rate is almost always preferable to the bigger bonus. However, if the lender offering the best rate happens to have the best bonus, that is a win-win.
Deciding between CommonBond and Splash
There isn’t a borrower demographic that will clearly be better off with one company or the other. Right now, the biggest difference between the two lenders is arguably the new borrower promotions they are running.
This site normally suggests borrowers check rates with at least 3-5 lenders to find the best deal. This is because the lender advertising the lowest interest rate isn’t necessarily the lender that will offer the lowest interest rate. Applications usually take 5-10 minutes depending on the lender, so 30 minutes of effort can translate into considerable savings.
Splash Financial and CommonBond are both worthy of the 5-10 minutes it takes to investigate rates.