You can save thousands of dollars by refinancing your student loans. A lower interest rate and different loan term can make repayment easier. But you shouldn’t apply with just any lender.
Researching lenders and digging into the fine print can take some legwork. But doing your due diligence could spare you the headache of working with a lender that offers subpar service.
Keep these four key questions in mind when you’re ready to shop lenders.
1. How are they ranked by independent rating organizations?
You’ve probably heard of the Better Business Bureau, but you may not know that it can help you review a lender and avoid getting scammed.
On the BBB website, type the name of any student loan refinancing company in the search bar, and you’ll find a letter grade for the company. Laurel Road, for example, is a Connecticut-based institution that offers student loan refinancing and has an A- on the BBB website.
The BBB bases its rating on information from the company’s existing customer reviews as well as original research. The letter grade also reflects factors such as transparency and time in business.
2. What do current borrowers have to say?
Yelp isn’t just for picking a Chinese restaurant for dinner. Refinancing companies such as SoFi are rated on the review site. But Yelp shouldn’t be your only source for reviews.
The motherlode of student loan complaints, the Consumer Financial Protection Bureau, has an interactive tool that allows you to see complaints a lender is receiving and how they are responding.
The data can help you uncover common problems customers are having, or simply give you an idea of the company’s customer service.
You can also search review sites like TrustPilot.com. There, you can uncover real success (or horror) stories from customers and see a rating. SoFi, for example, has 703 reviews and a 9.6-out-of-10 rating on the site. That can tell you a lot about the lender.
You can also search for reviews on the best banks for refinancing your loans.
3. Is the lender allowed to offer loans in my state?
Consult your state’s department of finance to ensure a lender is legally allowed to lend to you and in good standing.
You may be able to find out which states a lender is allowed to offer loans by checking its website. CommonBond, for example, lists 44 eligible states on its FAQ page.
You can also find contact information for your state on the Conference of State Bank Supervisors’ website. That will allow you to get in touch with someone who can tell you whether a lender is certified and in good standing.
4. What does the lender have to say?
When you’ve exhausted online sources, give the lender a call or check their website. You may learn some interesting details.
For example, CommonBond won a 2017 People’s Choice Stevie Award for Favorite Customer Service. It’s an interesting fact, but one that might not be advertised online.
You can also ask the lender if they have a Network Promoter Score. The NPS is based on the question, “How likely is it that you would recommend [company] to a friend or colleague?” The score will be somewhere between -100 and 100 and is a good indicator of how happy customers are with the business.
But if you’re dialing the lender, you may not even need to speak with a customer service rep to determine whether you want to work with them. If you’re trapped in a maze of automated menus, imagine trying to reach someone when you have a question about your loan.
Choosing a student loan refinancing company
The four questions above are valuable because they go beyond what lenders typically share with prospective customers. Yes, average savings, APRs, and loan terms are important factors to consider when you’re refinancing student loans, but so is customer service.
With that in mind, don’t rely solely on any one factor when making your decision. Every piece of information you gather helps you determine whether a lender is a fit for you and whether any red flags need to be further researched.
Don’t feel bad about putting lenders’ customer service reps through the ringer. After all, if their company is going to vet you, there’s no reason you can’t vet them.
Interested in refinancing student loans?Here are the top 6 lenders of 2018!
|Lender||Rates (APR)||Eligible Degrees|
|Check out the testimonials and our in-depth reviews!|
|2.65% - 7.14%||Undergrad & Graduate||Visit SoFi|
|2.99% - 6.99%||Undergrad & Graduate||Visit Laurel Road|
|2.57% - 6.32%||Undergrad & Graduate||Visit Earnest|
|2.56% - 8.12%||Undergrad & Graduate||Visit Lendkey|
|2.57% - 6.49%||Undergrad & Graduate||Visit CommonBond|
|2.63% - 8.34%||Undergrad & Graduate||Visit Citizens|