Soon after my girlfriend and I moved into our new apartment, we discovered a big budgeting error. A letter from GEICO said our change of address added $350 to our annual car insurance cost.
The stumper is that we hadn’t left the state. We’d moved 2.3 miles away.
We all know that where you live affects how much you spend and save on a daily basis. After all, our CEO saved $15,640 after he moved to Texas, a state with no income tax.
But did you know that your address may also change what you pay for things like car insurance and student loans? Here’s how your zip code can affect various rates — and what you can do to prevent it.
Car insurance rates by zip code
After learning that my car insurance payment was increasing, I phoned a customer service representative at GEICO. The voice on the other end didn’t beat around the bush: We had moved into a lesser neighborhood, she said.
GEICO’s not the only insurance company that cares about your address. Both State Farm and AllState’s Esurance, for example, say your location is meaningful. It can reveal whether you’re more or less likely to be parked or driving in an area that has higher rates of car accidents or thefts.
Some people believe that determining insurance rates by zip code is a form of redlining. Redlining is a term used to describe how insurers may make it difficult for lower-income applicants to afford premiums.
California, Massachusetts, and Hawaii have banned car insurers from using credit scores to determine insurance quotes. In these cases, insurers use a proxy, such as a residential address, to measure risk. California insurers are also barred from using zip codes.
Where I live in New York City, however, both location and credit history are factors. Consumer Reports found that “single New Yorkers with good credit scores and clean driving records would pay an average of $255 more in annual premiums than if they had excellent credit scores.”
How to lower your premium: If you believe you have higher insurance rates due to your zip code, seek out discount and rebate opportunities from your current service provider. GEICO, for example, said we could slash $153 off our bill by completing a defensive driving course.
If these kinds of discounts don’t close the gap between your original rate and your new one, shop around. In our case, Progressive’s rates bested GEICO’s in the new neighborhood.
The state of your student loan rates
Where you live can also have a direct impact on your student loans. Paying off your student loans is easier in some states. Other states may offer specific refinancing and loan forgiveness programs for residents.
But does your address affect the APR you’ll be quoted on a new loan?
The short answer is no. Christine Roberts, head of student lending at Citizens Bank, said that her company does its best to include as many qualifying factors as possible in its underwriting process, but your address is not one of them.
Ask the customer service of other lenders — from College Ave to Education Loan Finance — and you’ll get the same answer. Lenders like these are most concerned with your credit history or the history of your cosigner. Interestingly, your credit score does not consider where you live, according to myFICO.
But your physical address can affect your student loan offers in one respect: when you’re applying to borrow from community banks and credit unions. LendKey, a top-rated lender of private student loans and refinancing, connects its applicants with more than 265 community lenders.
As a result, the address on your LendKey loan application could affect your quoted rate. It affects which lenders compete for your business. A small community bank or credit union in Brooklyn, New York, for example, likely won’t make an offer to an applicant based in Oakland, California.
Worried that your variable-rate loan will go up after you move? Your interest rate isn’t affected by where you live. Instead, it’s based on industry standards and national economic trends.
How to get a lower student loan rate: If you currently attend an out-of-state college, see whether you can score a better APR at home or close to campus. If your school’s area offers a better deal, consider moving there. Doing so could also save you big bucks on in-state tuition.
For borrowers looking to refinance their student loans, research your quote offers if you have a pending move. It may be wise to jump on — or wait for — a better rate quote that is even nominally tied to your physical address.
CommonBond is one such lender whose customer service says that your place of residence is a factor, albeit a minuscule one, in your rate quote.
Where you live affects how much you pay
Whether you’re insuring your car or paying for your education, there are tons of factors affecting your out-of-pocket costs. It’s important to be aware of them.
You may not decide to move again if you find that your insurance will increase by $350 per year, for example. But maybe it will motivate you to find a better deal — it did for me.
Interested in refinancing student loans?Here are the top 6 lenders of 2018!
|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
|2.47% – 6.99%3||Undergrad & Graduate|
|2.47% – 6.97%1||Undergrad & Graduate|
|2.51% – 8.09%4||Undergrad & Graduate|
|3.02% – 6.44%2||Undergrad & Graduate|
|2.47% – 6.71%5||Undergrad & Graduate|
|2.79% – 8.39%6||Undergrad & Graduate|