Refinancing with Earnest
Refinancing rates from 2.47% APR. Checking your rates won’t affect your credit score.
Student loan refinancing can be a complete game changer. You can combine your private and federal loans together and potentially get a better interest rate, saving you money over the life of your loan.
Unfortunately, student loan refinancing isn’t guaranteed. You need to be approved by a private lender first. And if you don’t meet the eligibility requirements, a lender might reject your application.
Here are the most common reasons you could get rejected for student loan refinancing, along with some tips on how to improve your chances.
One reason you might be rejected is your income. Lenders want to know that you’ll pay back your debt, and one of the greatest indicators they have is how much you earn. Because of this, approval for refinancing is harder for those who are unemployed, underemployed, or work in low-paying jobs.
But even if a lender thinks your income is too low, there’s still hope. If you need to boost your application, you can always apply with a cosigner. Cosigners are usually someone you have a close relationship with, such as a parent or spouse.
If you miss payments or are otherwise unable to repay your debt, your cosigner will be legally responsible for doing so. But if you make consistent, on-time payments, the lender might eventually release your cosigner from the loan.
In the meantime, you could also try to boost your income. Through proper budgeting and steady work, you can increase your earnings along with your chances for student loan refinancing.
2. Debt-to-income ratio
Beyond your annual salary, lenders also look at your debt-to-income (DTI) ratio. A typical calculation takes all your monthly debt payments (such as those for a car loan, credit card, or mortgage) and divides it by your gross income (your income before taxes and deductions).
Lenders are looking for low DTI ratios, typically 40 percent or less, but each lender will have their own specific requirements. Even if you’re making six figures, it’s possible you may not qualify for refinancing if you also have six figures in debt.
Applying with a cosigner could help make your application stronger. If a cosigner has your back, you won’t seem like such a risky candidate for a refinanced student loan.
You should also strive to pay down your debts as fast as possible. If you have credit card debt, for instance, consider switching to a card with a lower interest rate. Sometimes, it’s even useful to take out a low-interest personal loan to pay off high-interest credit card debt more quickly.
The sooner you improve your DTI, the faster you’ll get approved for student loan refinancing.
3. Employment history
You’re so much more than your job, but on paper your job and employment history play an important role in whether you get approved for refinancing or not. Some lenders also prioritize borrowers who work in certain fields.
Most lenders ask for proof of employment or a job offer letter. Lenders want to know that you have a stable job now and that you’ll continue to have one in the future.
If you don’t have steady work yet, hold off on applying until you do. Make the job search a priority over refinancing. Once you’ve established a steady source of income, you can try applying for student loan refinancing again.
4. Repayment history
Have you ever missed a payment on any of your loans? No matter how careful you are, we all make mistakes sometimes. Unfortunately, that late payment will show up on your credit report.
They say that the past is the greatest indicator of the future and prospective lenders definitely abide by this rule. Even a one-time mistake could blemish your repayment record. Some lenders might be more forgiving, but typically, they’re looking for borrowers who can manage their payments and make them on time.
Even though late payments stay on your record for seven years, you can still take steps to improve your credit. Paying down debt and making on-time payments can help your credit bounce back.
5. Credit score
Your credit score is essentially the GPA of your creditworthiness — it’s a numerical value that lenders use to evaluate your risk as a borrower.
Your payment history, credit utilization (how much of your credit limit you use), length of your credit history, and amounts owed all affect your credit score. If you missed a few payments or consistently charge your credit cards up to the limit each month, you might be considered a risk.
In order to qualify for student loan refinancing, you need a good credit score. But what’s considered good? Most lenders want to see a score of 680 or above. Popular refinancing lender SoFi will consider applicants with a score of 650 or higher.
You can monitor your credit score with a free service such as Credit Karma. Plus, you can request one free credit report a year from AnnualCreditReport.com. If you spot any errors, make sure to dispute them and get them removed from your report.
If you continue to make on-time payments toward your debt, your credit score will increase over time. And this will give you a better shot at being approved for refinancing.
You can improve your eligibility for refinancing over time
These are the most common reasons why people get rejected for refinancing. But by being proactive about your finances, you can improve your chances for approval.
If a lender rejects your refinancing application, try applying with other lenders. Each lender sets its own requirements, so even though you get a “no” from one lender, another could say “yes.”
If you’ve been rejected for student loan refinancing, try to pinpoint the specific reason. Then, do what you can to fix the problem. In the meantime, continue to research student loan refinancing lenders to find one that’s the best fit for you.
Interested in refinancing student loans?Here are the top 6 lenders of 2018!
|Lender||Variable APR||Eligible Degrees|
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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 6.97% APR (with Auto Pay). Variable rate loan rates range from 2.47% APR (with Auto Pay) to 6.30% 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% – 6.30%1||Undergrad & Graduate|
|2.51% – 8.09%4||Undergrad & Graduate|
|3.02% – 6.44%2||Undergrad & Graduate|
|2.69% – 7.21%5||Undergrad & Graduate|
|2.79% – 8.39%6||Undergrad & Graduate|