Refinancing with Earnest
Refinancing rates from 2.57% APR. Checking your rates won’t affect your credit score.
When it comes to debt consolidation, you might be interested in combining a number of outstanding debts into a single debt.
Maybe you have student loans with multiple servicers and different credit card balances. Or, you have multiple auto loans and mortgage payments. Either way, a debt consolidation loan would allow you to put everything under one lender with one monthly payment.
Debt consolidation loans, especially if you have large debts or numerous accounts, can have a huge impact on your financial situation. And while they can make your life a bit easier, consolidation loans aren’t the right choice for everyone.
Here are 12 truths you need to know about debt consolidation.
Pros of debt consolidation
1. Fewer monthly payments
Maybe your life has become too complicated thanks to debt balances with different due dates and multiple lenders.
Debt consolidation can simplify your life and finances. Fewer payments mean less likelihood you’ll inadvertently forget one.
2. Lower monthly payments
Often times, consolidating with a new lender can lower your monthly payment. This is because a consolidation loan is a new loan, so you’re starting your repayment “clock” over again.
However, keep an eye on the length of the new repayment term to make sure you’re comfortable with it (more on this below).
3. Lower interest rates
Depending on your creditworthiness, refinancing federal or private student loans with a private lender may lower your interest rates. This can also occur with other forms of high-interest debt refinanced through a new lender.
However, consolidating federal student loans through the federal Direct Loan Consolidation program won’t result in an interest rate decrease. In fact, there’ll be a slight interest rate increase.
Cons of debt consolidation
4. Without decent credit, you won’t qualify
Debt consolidation is generally only the best option if your credit score has improved significantly since you took out the original loans you’re hoping to consolidate. That improvement is what will enable you to qualify for better terms.
5. Repayment term may be lengthened
Your monthly payment may be lower, yes. However, that may be because your repayment term has doubled from 10 years to 20 years or more.
With longer repayment terms you may not be saving any money in the long run. Crunch the numbers carefully and ask yourself what your goals are with a consolidation to make sure you’re getting what you want out of the deal.
6. Your interest rate may not be lower
As mentioned above, the federal Direct Loan Consolidation program won’t lower interest rates. In fact, the program takes the average interest rate of included eligible loans and adds 0.25 percent.
And consolidating private loans or other forms of debt at a lower interest rate may not be possible if your credit isn’t great. That’s assuming you qualify at all.
Find reputable, legitimate consolidation organizations
7. For federal student loans
You should never be charged a fee for consolidating your federal student loans through the Direct Loan Consolidation program.
The application is available electronically or as a hard copy. It can be downloaded online at StudentLoans.gov.
If you’re asked to pay an application fee or the website doesn’t end in .gov, then you’re not dealing with the U.S. Department of Education’s consolidation servicers.
8. For private student loans
If you’re hoping to refinance student loans with a private lender, be on the lookout for red flags.
There are plenty of lenders out there hoping to take advantage of debtors whose only goal is to take responsibility and improve their financial situations.
9. Watch for red flags when consolidating consumer debt
Whether you’re considering a personal loan, a home equity loan, a debt relief or debt management program, watch out for red flags that it’s a scam.
When it comes to debt relief organizations, their state licenses, membership in a national trade association, Better Business Bureau accreditation, and non-profit status are clues you’re headed in the right reputable direction.
10. Keeping like debts together may be best
Yes, you’re trying to simplify your life and reduce the number of payments you need to make. However, keeping debts of the same type together rather than consolidating credit card debt with student loan debt or mortgage debt is probably best.
Federal student loans come with many perks you may not want to give up, and even private student loan interest is tax deductible if you meet the requirements. There are always going to be considerations to keep in mind before you embark upon debt consolidation.
11. Your consolidation loans may have a variable interest rate
Right now the interest rates on variable loans are lower than fixed rate loans, for the most part. However, with the Fed planning to incrementally increase interest rates, that could change.
Read the fine print on any debt consolidation loan carefully before you sign on the dotted line. And be sure you’ll save money even if interest rates rise based on the terms of the loan.
12. Don’t rack up more debt
Particularly if you’re using debt consolidation to pay off consumer debt. It can be tempting to use your newly paid-off credit cards to loosen your financial reins.
Remember, runaway credit usage may have been what got you into trouble in the first place. Take whatever actions you need to do to make sure you don’t put yourself in the same situation all over again.
Avoid analysis paralysis
As with every major financial decision, there’s a lot to consider before deciding what’s right for you. However, the above truths are a starting point if you’re contemplating consolidating student loans or other forms of debt.
Only you know your financial picture well enough to determine what your goals are and how best to reach them. The last thing you want is to invest your valuable time into the debt consolidation process only to find that your situation has not improved.
Don’t be intimidated by debt consolidation when it can make your life easier. Ask questions — of yourself and of your (potential) lenders — to make sure you will get what you want and need out of the consolidation process.
Interested in refinancing student loans?Here are the top 6 lenders of 2019!
|Lender||Variable APR||Eligible Degrees|
|Check out the testimonials and our in-depth reviews!
1 Important Disclosures for Earnest.
To qualify, you must be a U.S. citizen or possess a 10-year (non-conditional) Permanent Resident Card, reside in a state Earnest lends in, and satisfy our minimum eligibility criteria. You may find more information on loan eligibility here: https://www.earnest.com/eligibility. Not all applicants will be approved for a loan, and not all applicants will qualify for the lowest rate. Approval and interest rate depend on the review of a complete application.
Earnest fixed rate loan rates range from 3.89% APR (with Auto Pay) to 7.89% APR (with Auto Pay). Variable rate loan rates range from 2.47% APR (with Auto Pay) to 6.97% APR (with Auto Pay). For variable rate loans, although the interest rate will vary after you are approved, the interest rate will never exceed 8.95% for loan terms 10 years or less. For loan terms of 10 years to 15 years, the interest rate will never exceed 9.95%. For loan terms over 15 years, the interest rate will never exceed 11.95% (the maximum rates for these loans). Earnest variable interest rate loans are based on a publicly available index, the one month London Interbank Offered Rate (LIBOR). Your rate will be calculated each month by adding a margin between 1.82% and 5.50% to the one month LIBOR. The rate will not increase more than once per month. Earnest rate ranges are current as of Month/Day/Year, and are subject to change based on market conditions and borrower eligibility.
Auto Pay discount: If you make monthly principal and interest payments by an automatic, monthly deduction from a savings or checking account, your rate will be reduced by one quarter of one percent (0.25%) for so long as you continue to make automatic, electronic monthly payments. This benefit is suspended during periods of deferment and forbearance.
The information provided on this page is updated as of 08/21/18. Earnest reserves the right to change, pause, or terminate product offerings at any time without notice. Earnest loans are originated by Earnest Operations LLC. California Finance Lender License 6054788. NMLS # 1204917. Earnest Operations LLC is located at 302 2nd Street, Suite 401N, San Francisco, CA 94107. Terms and Conditions apply. Visit https://www.earnest.com/terms-of-service, email us at firstname.lastname@example.org, or call 888-601-2801 for more information on ourstudent loan refinance product.
© 2018 Earnest LLC. All rights reserved. Earnest LLC and its subsidiaries, including Earnest Operations LLC, are not sponsored by or agencies of the United States of America.
2 Important Disclosures for Laurel Road.
Laurel Road Disclosures
APR stands for “Annual Percentage Rate.” Rates listed include a 0.25% EFT discount, for automatic payments made from a checking or savings account. Interest rates as of 11/8/2018. Rates subject to change.
Variable rate options consist of a range from 3.27% per year to 6.09% per year for a 5-year term, 4.64% per year to 6.14% per year for a 7-year term, 4.69% per year to 6.19% per year for a 10-year term, 4.94% per year to 6.44% per year for a 15-year term, or 5.19% per year to 6.69% per year for a 20-year term, with no origination fees. APR is subject to increase after consummation. The variable interest rate will change on the first day of every month (“Change Date”) if the Current Index changes. The variable interest rates are based on a Current Index, which is the 1-month London Interbank Offered Rate (LIBOR) (currency in US dollars), as published on The Wall Street Journal’s website. The variable interest rates and Annual Percentage Rate (APR) will increase or decrease when the 1-month LIBOR index changes. The variable interest rates are calculated by adding a margin ranging from 0.98% to 3.80% for the 5-year term loan, 2.35% to 3.85% for the 7-year term loan, 2.40% to 3.90% for the 10-year term loan, 2.65% to 4.15% for the 15-year term loan, and 2.90% to 4.40% for the 20-year term loan, respectively, to the 1-month LIBOR index published on the 25th day of each month immediately preceding each “Change Date,” as defined above, rounded to two decimal places, with no origination fees. If the 25th day of the month is not a business day or is a US federal holiday, the reference date will be the most recent date preceding the 25th day of the month that is a business day. The monthly payment for a sample $10,000 loan at a range of 3.27% per year to 6.09% per year for a 5-year term would be from $180.89 to $193.75. The monthly payment for a sample $10,000 loan at a range of 4.64% per year to 6.14% per year for a 7-year term would be from $139.65 to $146.76. The monthly payment for a sample $10,000 loan at a range of 4.69% per year to 6.19% per year for a 10-year term would be from $104.56 to $111.98. The monthly payment for a sample $10,000 loan at a range of 4.94% per year to 6.44% per year for a 15-year term would be from $78.77 to $86.78. The monthly payment for a sample $10,000 loan at a range of 5.19% per year to 6.69% per year for a 20-year term would be from $67.05 to $75.68.
However, if the borrower chooses to make monthly payments automatically by electronic funds transfer (EFT) from a bank account, the variable rate will decrease by 0.25%, and will increase back up to the regular variable interest rate described in the preceding paragraph if the borrower stops making (or we stop accepting) monthly payments automatically by EFT from the designated borrower’s bank account.
3 Important Disclosures for SoFi.
4 Important Disclosures for LendKey.
Refinancing via LendKey.com is only available for applicants with qualified private education loans from an eligible institution. Loans that were used for exam preparation classes, including, but not limited to, loans for LSAT, MCAT, GMAT, and GRE preparation, are not eligible for refinancing with a lender via LendKey.com. If you currently have any of these exam preparation loans, you should not include them in an application to refinance your student loans on this website. Applicants must be either U.S. citizens or Permanent Residents in an eligible state to qualify for a loan. Certain membership requirements (including the opening of a share account and any applicable association fees in connection with membership) may apply in the event that an applicant wishes to accept a loan offer from a credit union lender. Lenders participating on LendKey.com reserve the right to modify or discontinue the products, terms, and benefits offered on this website at any time without notice. LendKey Technologies, Inc. is not affiliated with, nor does it endorse, any educational institution.
5 Important Disclosures for CommonBond.
Offered terms are subject to change. Loans are offered by CommonBond Lending, LLC (NMLS # 1175900). If you are approved for a loan, the interest rate offered will depend on your credit profile, your application, the loan term selected and will be within the ranges of rates shown.
All Annual Percentage Rates (APRs) displayed assume borrowers enroll in auto pay and account for the 0.25% reduction in interest rate. All variable rates are based on a 1-month LIBOR assumption of 2.28% effective October 10, 2018.
6 Important Disclosures for Citizens Bank.
Citizens Bank Disclosures
|2.57% – 6.97%1||Undergrad & Graduate|
|2.47% – 6.99%3||Undergrad & Graduate|
|2.68% – 8.77%4||Undergrad & Graduate|
|3.24% – 6.66%2||Undergrad & Graduate|
|2.61% – 7.35%5||Undergrad & Graduate|
|3.01% – 9.75%6||Undergrad & Graduate|