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Student Loan Consolidations

Consolidate your student debt, manage payments and save money with student loan consolidation and refinancing.

By U.S. News Staff | April 1, 2019, at 11:29 a.m.

The average college graduate has more than $30,000 in debt, according to The Institute of College Access & Success, and it can take decades to repay. Student debt could impact your ability to save for retirement, have disposable income or qualify for other loans, including a mortgage.

Dealing with long-term debt can be difficult, but having a strategy and tools can help. Consolidating or refinancing student loans are two popular options that could help you manage your payments, save money and open up additional options for loan forgiveness and repayment.

This guide provides an in-depth explanation of the differences between federal loan consolidation and private loan refinancing, the pros and cons of each and insight into which options are best for different situations.

There are a variety of private lenders that offer student loan refinancing, each with different potential interest rates, loan terms and features. U.S. News compared private lenders to come up with recommendations for different kinds of borrowers.

Best Student Loan Consolidation Companies of 2019

No private student loan refinancer is perfect for every borrower. U.S. News recommends the following five top performers based on how they can address certain borrowers’ needs and their overall performance compared with other lenders.

These are a good starting point for most people, but you should research each company on your own.

Top Lender for Loan Term Options

Overview:
SoFi is one of the largest student loan refinancers and was one of the first to allow borrowers to refinance their federal and private student loans into a single new loan. It tends to focus on graduates who have a high income and strong credit history.

Best features:
SoFi offers student loan refinancing with no predetermined maximum loan amount.

When you refinance your student loans with SoFi, you become a member. As a member, you’ll be eligible for additional services, including a career coach, a free financial advisor, waived fees for wealth management products and discounts on other loans from SoFi. Members are invited to events, such as cooking classes and happy hours, in major cities around the country.

If you lose your job and it wasn’t your fault, SoFi will put your loans in forbearance for up to three months and offer job placement assistance.

Drawbacks: SoFi prefers to lend to creditworthy borrowers with at least a 650 FICO credit score and consistent income. If you don’t meet the criteria, you may not qualify for a loan or low rates.

If you use a co-signer to qualify for refinancing, your co-signer will be tied to your loan until it’s paid off. Some other refinancers will release your co-signer once you establish a history of on-time payments.

Best for people who:

Credit requirements:

Employment requirements:

Student eligibility:

  • Only accepts graduates: Yes
  • Eligible degrees: Undergraduate and graduate from Title IV-accredited schools
  • Eligible loans: Private and federal
  • Co-signer option: Yes
  • Preapproval quote check option: Yes
  • State restrictions: Available in all 50 states

Interest rates:

  • Rate types: Fixed and variable
  • Autopay discount: 0.25 percent

Loan and refinancing terms:

  • Minimum loan amount: $5,000
  • Maximum loan amount: No maximum
  • Minimum loan period: Five years
  • Maximum loan period: 20 years

Repayment and hardship options:

  • Repayment options: Greater-than-minimum payments and biweekly payments are offered
  • Deferment: It honors existing grace periods on refinanced loans. Deferment is also available for up to six months for borrowers in school at least half time, active-duty service members, those undergoing disability rehabilitation and those taking part in SoFi’s Entrepreneurship Program.
  • Forbearance: Yes, in three-month increments for up to 12 months total if you lose your job through no fault of your own

Fees:

  • Origination fee: None
  • Late payment: Not disclosed
  • Additional fees: Not disclosed

Additional features:

  • SoFi’s Entrepreneurship Program can connect you with peers, mentors and investors who can help turn your idea into a business.

Top Company for Flexible Repayment Options

Overview:
LendKey isn’t a lender. Instead, it offers a network of hundreds of community banks and credit unions that will refinance your student loans. LendKey unifies and manages the application process, offers customer support to applicants and services the loans.

Best features:
Instead of individually researching and comparing small banks and credit unions, you can use LendKey to see a list of potential good fits and their loan offerings. This can make it easy to quickly compare a variety of refinancing options.

Because your loan comes from small banks and credit unions, you may receive better terms or more lenient repayment options. For example, some of the lenders let you make interest-only payments, which could decrease your monthly payment amount but will increase the cost of your loan.

Drawbacks:
You may need to join a credit union if you want it to refinance your loan. Eligibility varies depending on the credit union, but may be limited to people who live in a certain region or work at particular companies.

The terms and qualifications can vary depending on the lender. Read the fine print to understand your new loan before agreeing to refinance.

Best for people who:

Credit requirements:

Employment requirements:

  • Minimum income: $24,000
  • Minimum employment eligibility: Must meet minimum income requirement of $24,000 annually

Student eligibility:

  • Only accepts graduates: Yes
  • Eligible degrees: Undergraduate and graduate
  • Eligible loans: Private and federal
  • Co-signer option: Yes, and you might be able to release the co-signer after making 12 to 36 consecutive on-time full payments.
  • Preapproval quote check option: No
  • State restrictions: No, but some of the lenders in the network may be regional.

Interest rates:

  • Rate types: Fixed and variable
  • Autopay discount: 0.25 percent

Loan and refinancing terms:

  • Minimum loan amount: Varies
  • Maximum loan amount: Varies
  • Minimum loan period: 10 years
  • Maximum loan period: 10 years

Repayment and hardship options:

Fees:

  • Origination fee: None
  • Late payment: Not disclosed, dependent on the lender
  • Additional fees: Not disclosed, dependent on the lender

Top Lender for Merit-Based Financing and Flexible Eligibility

Overview:
Earnest offers borrowers flexibility with refinancing student loans. The company has a nontraditional approach to underwriting, which takes your money management skills into account.

Best features:
Although your credit history matters, Earnest considers merit-based factors when reviewing applicants. For example, your history of making retirement account contributions and saving for a rainy day will benefit your application. Your job and career prospects are also considered.

Earnest gives borrowers options when it comes to repaying their loans, including choosing your monthly payment and the option to make multiple payments each month or the ability to skip a payment every 12 months without a penalty as long as you’re in good standing.

Earnest has earned a TrustPilot excellent rating and an A+ Better Business Bureau rating.

Drawbacks:
Applicants can’t apply with a co-signer, which could make it more difficult for some people to qualify for refinancing.

Best for people who:

Credit requirements:

Employment requirements:

Student eligibility:

  • Only accepts graduates: Yes (or if you’re within six months of graduating)
  • Eligible degrees: Undergraduate and graduate from Title IV-accredited schools
  • Eligible loans: Private and federal
  • Co-signer option: No
  • Preapproval quote check option: Yes
  • State restrictions: Not available in all states.

Interest rates:

  • Rate types: Fixed and variable
  • Autopay discount: 0.25 percent

Loan and refinancing terms:

  • Minimum loan amount: $5,000
  • Maximum loan amount: $500,000
  • Minimum loan period: Five years
  • Maximum loan period: 20 years

Repayment and hardship options:

  • Repayment options: No prepayment penalty
  • Deferment: Available
  • Forbearance: Yes, during period of economic hardship

Fees:

  • Origination fee: None
  • Late payment: No
  • Additional fees: None

Additional features:

  • You can make biweekly payments, which will result in paying less overall interest. If you’re in good standing, you can skip one payment every 12 months.
  • You can customize your rate and term based on how much you can afford to pay each month, which can save you money compared with traditional financing terms.

Top Lender for Dedicated Customer Service

Education Loan Finance

Overview:
Education Loan Finance has offered student loan refinancing since 2015. A division of SouthEast Bank, the management team has more than 30 years of experience in student loans.

Best features:
Borrowers are assigned a dedicated personal loan advisor who is a single point of contact from application to payoff. Personal loan advisors are four-year college graduates trained and tested in student loan programs and refinancing.

Education Loan Finance gives borrowers the opportunity to save with special programs. The lender’s fast track bonus offers $100 if your loan is approved and you accept your offer within 30 days of your initial application date. If you refer a friend who refinances a loan, you’ll get $400 and your friend will get $100.

Drawbacks:
Borrowers must have a minimum 680 FICO credit score, at least three years of credit history and a minimum annual income of $36,000.

Deferment and forbearance are at the discretion of the bank, but may be granted for up to 12 months. Discharge due to death or disability is individually reviewed. Co-signers may not be released from the loan. However, you can apply for a new loan without a co-signer.

Best for people who:

  • Can meet qualification requirements
  • Want to work with a personal loan advisor
  • Can take advantage of bonus programs

Credit requirements:

Employment requirements:

  • Minimum income: $35,000
  • Minimum employment eligibility: Must meet minimum income requirement of $35,000 annually

Student eligibility:

  • Only accepts graduates: Yes
  • Eligible degrees: Undergraduate, graduate and other advanced degrees
  • Eligible loans: Private and federal
  • Co-signer option: Yes
  • Preapproval quote check option: Yes
  • State restrictions: Available in all 50 states

Interest rates:

  • Rate types: Fixed and variable
  • Autopay discount: Automatically applied, electronic payments are required for all borrowers

Loan and refinancing terms:

  • Minimum loan amount: $15,000
  • Maximum loan amount: None
  • Minimum loan period: Five years for students and parents
  • Maximum loan period: 20 years for students, 10 years for parents

Repayment and hardship options:

  • Repayment options: No prepayment penalty
  • Deferment: May be granted for up to 12 months
  • Forbearance: May be granted for up to 12 months

Fees:

  • Origination fee: None
  • Late payment: 5 percent of the past due amount or $50, whichever is less after a 10-day grace period
  • Additional fees: Not disclosed

Additional features:

Comparison Table of Top Companies


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SOURCE: http://loans.usnews.com/student-loans-consolidation-refinancing

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