LendKey was founded in 2007. Originally, they were called Fynanz, and were a peer-to-peer (P2P) lending company. Their model was simply to set up individual borrowers with individuals or businesses that had some capital to lend.
LendKey raised venture funding twice since its inception. First, in 2010 they raised $9.5 million. Then, they raised an additional $12.5 million in 2013, and rebranded their company as LendKey.
When the company changed its name, LendKey also narrowed its focus from general P2P lending to working with credit unions and community banks.
LendKey uses its online platform and technology to match consumers with local banks and credit unions. Since their product is completely online, LendKey’s overhead is extremely low, and they are able to help potential borrowers secure low, competitive interest rates.
At the same time, LendKey helps small, local lenders compete with the large, national companies. It gives them access to many more potential borrowers than they would normally have access to.
By September 2014, LendKey was working with over 300 credit unions, and a combined loan portfolio of $700 million. The institution is headquartered in New York City, but it also has a large office in Cincinnati, OH.
What Does LendKey Offer?
LendKey has a couple of loans available to current students and graduates.
For current students, LendKey offers competitive private loans, with low interests and discounts when the loans hit full repayment status, automatic payments, and even for good grades.
For college grads, they offer great rates on refinancing and consolidation. When you refinance or consolidate your student loans, you can extend the length of your loans, or reduce your interest rates, to lower your monthly payments and increase your cash flow.
You can also combine all your federal student loans into a single loan, making life a whole lot less complicated. Believe me, having a single loan to pay off, instead of having a bunch of them, is much easier to keep track of. For more on LendKey's consolidation and refinancing, see the section dedicated to it below.
LendKey offers multiple payment terms on refinancing. You can get a loan for 5, 10, or fifteen years. They also offer variable and fixed interest rates of 2.14% to 8.72%, depending on your credit score and history.
LendKey has some other benefits as well:
· Unemployment protection. They have the longest forbearance in the country, with a length of 18 months over the length of the loan. You can pause payments for up to 6 consecutive months.
· Interest-Only loans. They allow borrowers to borrow pay only the interest on their loans for up to four years before resuming their regular interest plus principal payments.
· Co-Signer release. Once payments have been made for a minimum of 24 consecutive, on-time payments of interest and principal, LendKey will release the cosigner.
· Low or no fees. LendKey doesn’t charge any origination fees or prepayment penalties. They also don’t penalize you if you pay off your loans early.
About LendKey Student Loan Consolidation
Lendkey is a student loan consolidation and refinancing company offering borrowers a unique approach to helping with student loans. This company has been around since 2007. Typically, there are two ways to approach loan consolidation. One way is going with one of the newer companies like SoFi or CommonBond who compete eagerly with lower interest rates but are without a longstanding reputation. Plus these companies are not usually local. The other way to consolidate is through local banks and lenders, like Wells Fargo, where the borrower can go into a local office for a more personable experience. However, this approach is going to cost in higher interest rates.
This is where Lendkey has the advantage. They are the middleman between the borrower and a reputable local community bank. They have the lowest interest rates presently and provide borrowers a personal experience with a local lender who will offer the loan. Lendkey does business with over 300 plus community banks and credit unions scattered all over the United States. In any of the 50 states, Lendkey can issue loans working together with the borrower and the qualified lender.
Although Lendkey’s consolidation approach is considered one of the best, there are some downsides to Lendkey’s abilities to help everybody.
The Disadvantages of LendKey Student Loan Consolidation
- Even though the application process is identical to any other lender, there is a credit check and the borrower’s credit has to be good. They also look at the debt-to-income ratio. People are encouraged to apply anyways, because each borrower is evaluated on a case-by-case basis.
- The lengths of a Lendkey Loan are max of 15 years. The industry standard is 20 years. For some borrowers, having that extra 5 years is preferable. Borrowers can have up to four years of interest only payments and there is no penalty if the loan is paid off early.
- Lendkey doesn’t assist a whole lot with comparing institutions against each other. It is advised the borrower do the research for the banks being considered. All states offer variable loans, yet only certain states will offer fixed loans. The ideal situation is to have a bank in your state which offers the fixed rate loans.
- Lendkey will also consolidate a private loan with federal government loans. Borrowers need to understand there is no way to ‘undo’ a student loan consolidation. It is important to know if financial circumstances warrant combining federal and private loans, or it could be a bad mistake.
- Lendkey is not really a student loan marketplace.
What Makes LendKey Great
- The best advantage Lendkey has is their focus on starting the interest rate under 2 percent. They currently off an APR range of 1.90% APR to 6.92% APR. Lendkey will further reduce the interest rate by 1% once 10% of the loan principal is repaid.
- There is no prepayment penalty or no origination fees associated with their loans.
- Lendkey has lower payments, allowing the borrower to refinance to a manageable monthly payment.
- The application process in user-friendly, and makes it easy for a borrower to show for loan options.
- A cosigner release is available after 24 on-time payments. This may convince a cosigner to work with you, knowing the lender will shift full responsibility of the loan after a given time.
- Excellent Customer Support which is said to reflect as much as 97% of the customers being satisfied.
- At this time the list of eligible schools is 2,200 and growing fast. Lendkey doesn’t expect students to submit a lot of eligibility requests like other student loan refinancers.
- Lendkey offers a 30 day no-fee return policy which allows you to cancel the loan within 30 days without penalty fees or interest.
Other Reasons to Use Lendkey
Lendkey works with not-for-profit credit unions. There are many advantages to this, the best one being the personal experience the borrower will have working with credit union. Credit unions are local and tend to have higher acceptance rates than banks. They can also offer the lowest interest rates on the market. They also offer long unemployment protection.
How to Apply to LendKey
Applying through LendKey’s website is easy. Go to their homepage and click on Student Loan Refinancing link at the top of the page. From there you just type in you school, what kind of degree you got, your loan amount, and your credit.
Once that happens, you’ll get brought to a page that shows you your estimated percentage rate, length of loan, and monthly payment. If you want to move forward, type in your first and last name, and your email address, and some other personal information, and you can get your application started.
LendKey will then send out your information to its lenders and they’ll each determine your creditworthiness. Once the lenders look at your information, they send you offers for loans, and you get to decide which lender to go with.
Each lender has its own criteria, as does LendKey. Like I said, if you meet the lending criteria of the local lenders, you’ll get choices from LendKey. However, if you don’t meet the criteria, there’s a possibility you won’t get any offer from LendKey.
Once you choose a lender, you will have to complete an application with them. Remember, at no time does LendKey offer you a loan. They only provide you, the potential borrower, with access to other institutions that can offer you a way to refinance.
They won’t run a hard credit check. That happens when you apply directly with whatever credit union or local bank you decide to partner with.
Eligibility Requirements for LendKey
All of the federal financial institution requirements apply to loans applied to through LendKey.
All applicants need to be at least 18 and a U. S. citizen or permanent resident. They need to have graduated from a Title IV accredited universities or graduate school programs.
Other than that, each institution will have its own guidelines and restrictions, and you’ll need to check with each one you want to apply with for specifics.
LendKey is a great option for any student who doesn’t want to get a loan with a “big bank.” You don’t have to feel like a number. You also get to enjoy super competitive rates but still have the customer service of a credit union or community bank.
When you think about it, LendKey offers the best of both lending worlds. You get the interest rates the newer startup companies, like SoFi or Earnest, are offering. At the same time, you also get to work with established companies that have been around for a while.
Ultimately, if you decide to go with LendKey, you need to remember a few things:
· LendKey is NOT a lender. They do the legwork for you, so you don’t have to find a credit union or community bank yourself.
· LendKey can’t guarantee that you’ll get approved. Since LendKey isn’t the lender, they have absolutely zero control over who gets approved and who doesn’t. That’s up to each institution you apply to.
· LendKey only offers a max of 15 years repayment. Most lenders allow students to borrow for up to 20 years. While 15 years means paying less interest, it also means higher monthly payments. You’ll need to seriously consider your monthly budget to see if this is something that will work for you.
Whatever you decide, you should at least take a look at LendKey’s website. They offer you a free estimate for monthly payments and interest rates, and it won’t affect your credit at all.