Refinancing with Earnest
Refinancing rates from 2.57% APR. Checking your rates won’t affect your credit score.
Is 2018 the year you’re going to get your finances in order? If making better decisions about your money is one of your resolutions, you’re one of millions chasing that goal.
In our survey of the top money-related New Year’s resolutions of 2017, paying off debt came first. However, keeping a resolution can be hard. Only a small fraction of those who make a resolution actually keep it throughout the year.
Although achieving your resolutions is difficult, it’s not impossible — and it doesn’t need to be a tedious 12-month grind, either. If you have student loan debt, you can actually improve your finances in just a few minutes by refinancing your loans.
What is student loan refinancing?
Refinancing your loans can be a smart way to consolidate your debt, lower your monthly payment, or reduce your interest rate. When you refinance, you work with a private lender to take out a new loan in the amount of some or all of your current loans.
The new loan may have different terms, including length of repayment, minimum payment due, and interest rate. Also, you’ll have just one easy payment rather than multiple payments each month.
6 ways refinancing can help you stick to your resolutions
Although there are some drawbacks to refinancing, particularly if you have federal loans, refinancing your student debt can be a powerful tool to improve your finances.
Here are six ways refinancing can help you achieve your money goals:
1. You can free up money in your budget
If your monthly student loan payment is more than you can afford, or if it’s so high you don’t have enough left over to save, refinancing your loans could result in a lower payment.
When you refinance, you can opt for a longer repayment term. If you have five years left on your loan, you could extend repayment to seven or 10 years to make your monthly payments more affordable.
For example, if you borrowed $10,000 at 6.00% interest and repaid it over five years, your minimum monthly payment would be $193. If you refinanced that loan and extended your repayment term to 10 years, your payment would drop to $111, assuming you didn’t qualify for a lower interest rate. That means you’d have an extra $82 per month, or $984 a year, after refinancing.
It’s important to note that extending your repayment period will leave you in debt for longer, meaning you might pay more in interest over the life of your loan. But a smaller monthly payment could give you more breathing room in your budget or extra cash for other financial resolutions such as investing or saving for retirement.
2. You can become debt-free sooner
If your New Year’s resolution is to become debt-free as soon as possible, refinancing your loans can help accelerate your repayment.
When you refinance, you could qualify for a lower interest rate; some lenders offer fixed interest rates as low as 3.15%. If you get a lower interest rate but keep the same repayment term, more of your payment will go toward the principal rather than interest.
Let’s say you borrowed $35,000 at 6.00% interest with a 10-year repayment term and a minimum payment of $389 per month. Over the length of your repayment, you’d pay $11,629 in interest alone.
If you refinanced that same loan and nabbed an interest rate of 3.15%, you could pay off your loan a full year early without increasing your payments. With a nine-year term, your new loan would have a minimum payment of $373.
3. You can lower your debt-to-income ratio
If your goal is to buy a home in 2018, your debt-to-income (DTI) ratio plays a big role in getting a mortgage. Your DTI ratio looks at your monthly debt payments compared to your earnings, and is a number lenders use to determine whether you can afford a mortgage. The lower your DTI ratio, the more likely you are to get a mortgage.
If your DTI ratio is high, refinancing your student loans can help reduce it. If you refinance and opt for an extended repayment term or qualify for a lower interest rate, you can reduce your monthly obligation and improve your DTI ratio.
4. You can save money over time
Saving more money is one of the biggest New Year’s resolutions, and refinancing can help you achieve that goal. Spending just a few minutes applying for a refinancing loan can result in thousands saved for qualified borrowers.
For instance, if you borrowed $35,000 at 6.00% interest with a 10-year repayment term and a minimum payment of $389 per month, you’d pay back $11,629 just in interest charges.
If you refinanced that loan and received a 3.15% interest rate and stuck to a 10-year repayment term, you’d pay just $5,847 in interest. Refinancing your loans would save you over $5,500.
The money you save can be used to boost your emergency fund, build your retirement nest egg, or go toward a down payment on a home.
5. You can lock in a good interest rate
If you took out private student loans, you might have a variable interest rate. That means your interest rate can increase over time. Your payments with a variable-rate loan can start out affordable but increase over time as the interest rate fluctuates.
Refinancing your loans can eliminate interest rate changes and lock in a fixed rate, meaning both the interest rate and your minimum payment won’t change over the length of your loan.
6. You can free a cosigner from the loan
Strengthening relationships is another common New Year’s resolution. Although you might not realize it, your student loans can be harmful to your relationships with friends or loved ones.
If your current student loan includes a cosigner — someone who agrees to take equal responsibility for the debt — your cosigner has to make payments on the loan if you fall behind. Also, having that debt on their credit report can hurt their chances of getting other kinds of loans, such as an auto loan or mortgage.
That burden can strain your relationship with your loved one. One way to eliminate that stress is to refinance your loans into just your name or with a lender who offers cosigner release. A cosigner release allows you to take your cosigner off the loan, freeing them from any obligation on the debt.
Find a refinancing lender
Refinancing can be an effective way to jumpstart your financial New Year’s resolutions. If you’ve researched the benefits and drawbacks of refinancing and decided it’s right for you, compare refinancing loan offers from multiple lenders to get the best deal.
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|