Ash The Great | Oct 31, 2017 | 0
Lendkey Review – A Student Loan Matchmaking Company
The first thing I noticed about Lendkey on Google, before I saw the report from our research team, was the sheer number of top/five-star reviews it had. My suspicion glands were squirting overtime, so the first thing I looked up was their affiliate program. They have a very generous affiliate program and promises that their acceptance rates are the highest in the student-loan industry. Do you want to know if Lendkey is terrible? We are one of the few online reviewers that will be honest about it because we are one of the few that are not being paid via the Lendkey affiliate program. We makes our oodles of money from the many adverts we splice between our page text (the adverts are ugly and ruin the asthmatic of the text, but they help keep the lights on).
What Does Lendkey Do?
Lendkey offers three things. They offer student loan refinancing, home improvement loans and private student loans. It is still a loan company at heart, but some of the money for student loans comes from independent investors. You are able to visit their website and become a borrower or a lender.
As with most student-loan companies, the biggest benefits come from their loan refinancing services. Find out what sorts of terms and conditions that Lendkey offer, and find out what interest rates they offer, and if they beat your current student loan then refinance your student loan. If they do not beat your current rates, then try another company.
It is not as simple or sweet when it comes to getting a student loan or home-improvement loan with Lendkey. When you get these sorts of loans, you are usually stuck with whatever they will give you. You can shop around, but if you do not have sufficient credit, then you may be forced to either accept their terms and conditions and their interest rates, or not take out a loan at all.
Lendkey matches you with a community bank and/or group of lenders. You enter your details, and they show you what is on offer in your area and/or that applies to you. You may become an investor through one of the local banks or groups, or you may borrow by allowing the lenders to run a soft search on your credit. After that, you are shown what local community lenders or local banks are willing to offer you.
Risks As A Borrower And As A Lender
I am going to cover something that I feel other reviewers have neglected to mention. I am going to cover the risks of being a borrower and of being a lender. You take on a risk when you borrow, and on many occasions you risk more than just your credit rating. There is also an obvious risk when you lend, being that you may lose all of your investment.
Do You Take A Risk As A Borrower?
You are not taking a student loan from the government, which means it is going to be more difficult to wiggle out of when it comes time to pay. That is the first risk you take, but such a risk only applies to the sleazy people who are looking to cheat the system while demanding more and more for their lack of effort.
When you take a student loan, or any type of loan, you are putting your credit rating at risk. If you miss payments, then your credit rating will drop, and if you miss many or default, then you are going to have a hard time getting credit anywhere else for a long time. This may mean you have to put up with 10 – 20 years of consequences such as:
- Being unable to get loans or credit services elsewhere
- The inability to get a mainstream bank account
- You will only be allowed the very worst credit cards
- Most people with a poor credit rating have to pay to have a bank account
- The inability to get a mortgage for up to 20 years (or more)
- Estate agencies will charge you extra or refuse to let to you
- You will be unable to work in the legal sector, police or prison industry
- Insurance costs may become higher or you may see many refusals
- Other services such as phone, utilities, car finances, etc., will refuse you an account
Those are the risks that come with damaging your credit rating, or with becoming insolvent or going bankrupt. Other risks include the risk of losing your collateral, which is terrible if you put up your house or other assets. Plus, if you had a co-signer, then your co-signer may be stuck with your debt and may also lose any of his or her assets or job opportunities.
Do You Take A Risk As A Lender?
I do not want to discourage anybody from investing in community lending projects or peer-to-peer lending projects. Anything that takes food out of the mouths of banks and credit unions is okay in my book. However, you need to understand the usual and the unspoken risk when it comes to student loans.
On the one hand you have your “usual” risk when you lend to others. There is a chance that you will lose all of your investment and there is no backup or contingency in many cases. If several borrowers do not pay back their loans, then people in the lending group are going to suffer. This is not like with a savings account where your money is insured up to a certain amount.
The “unspoken” risk is the massive student loan debt bubble that is due to burst. During the Obama years, and to a lesser extent the Bill Clinton years (though Bill’s decision was made when the country could afford to make a few losses), but I digress, during the Obama years it became infinitely easier to get a student loan. This was a terrible idea because it caused the debt bubble we see today, but the motivation behind the idea was to make it easier for anybody to get into college.
Students are able to get student loans even if they didn’t have the grades required to get into a mainstream college. This prompted Universities/colleges to vastly increase their fees (because they could). Colleges and Universities used excuses such as updating their technology or hiring more administrative staff to justify their massive fee increases.
We now have a massive debt bubble where students are taking on student loans the sizes of mortgages, but all they get from it is a degree (if they are lucky). They get the same degree that cost people 5x less just 10 years ago. Ergo, we have a big chunk of people with massive amounts of student debt, and a government holding the debt with hopes that all these students will one day pay them back. When you lend to a student, you are doing what the government is doing, you are putting yourself into an encumbrance (for want of a better word) with the hopes that students will pay back their loans one day.
When the bubble bursts, the government is in real trouble, and so are any other investors who lent to students. Many say that the only way the bubble will burst is if a large group of qualified people decide they are better off on benefits or bankrupt than they are paying back their student loans. It doesn’t sound very plausible, yet this is almost exactly what happened in Greece.
Lendkey – Pros
- Lendkey has an application process that is similar to most of the lenders you find nationally. It allows smaller banks, credit unions and investors to offer you a loan without having to suffer through the complexities of that bank’s/credit union’s/or investor’s application process.
- The interest rates offered by Lendkey are on the low side. They are going to vary depending upon your circumstances, but on the whole they are low in comparison to other private lending companies. They cannot compete with the rates that the government offers you (in most cases), but they are still on the low side when compared with private lending companies and banks.
- There are no origination fees when you get a student loan or home-improvement loan from Lendkey. This is especially good when you consider that a common practice is to have an origination fee and weave it into the debt as a whole.
- Lendkey do not charge prepayment/early-payment fees, which means you may pay off your loans more quickly without fear of having to pay extra. If only more mortgage providers would offer such terms.
- There is a loan and loan cost calculator that you may use to help you plan your college expenses. The loan you get may be a very local loan where you may visit a bank or credit union branch near you.
- The co-signer release periods are fantastic, and I don’t use the word “Fantastic” lightly. On most of the student loans, except in less-than-normal circumstances, you can have your co-signer released from your loan in just a year (12 on-time payments). That is very good when you consider that the student loan will probably last ten years.
- There is a relatively flexible forbearance period, which is not world-class, but may help protect students who have good financial planning skills and good contingency planning skills
- Lendkey offers a grace period of six months. You get six months after graduating to get a job and start paying back your loan. Somebody who is willing to concentrate on getting a job and somebody who is maybe willing to travel/move in order to get a job will have no problem with the grace period.
They Do Or Do Not Charge Prepayment Fees
This was a big headache for our research team because other reviews claim that Lendkey offers loans without prepayment fees, yet we scoured their website and couldn’t find proof of this at all.
We took out a home improvement loan in New Jersey with cuGreenLoans, and their paperwork stated that we could repay the loan early without any sort of penalty, but is it the same for all the loans taken through Lendkey? It is unclear because Lendkey puts you in touch with lenders, but each lender is different and each have slightly different terms and conditions.
We took out a private student loan with Northern Star Credit Union, and they too said that we do not have to pay extra fees if we pay back the loan early, but our research team had a very hard time trying to find out if this applied to all loans that were found via the Lendkey website. You are going to have to check to see if the loan provider you are introduced to will allow you to pay off your loan early.
I Like Lenders Who Allow You To Repay Early
This is just me talking here, and not the research team or eCheck team. I think lenders who allow you to repay early without any extra fees are marvelous. I have always said that the fastest way to get out of debt is to do it without realizing you are doing it.
Things such as having money debited from your account the same day you are paid your wages it is a great way to get out of debt, and so is making micro payments towards your debt. Every time you check your bank balance, throw your change into your debt and round up your balance to the nearest ten or nearest dollar. If you receive a 20 in a birthday card, then pay it into your debt.
Companies that charge you early repayment fees/penalties make it difficult to pay in small amounts of money on an adhoc basis, and yet doing so is the best way to get out of debt quickly.
Lendkey – Cons
- Some of LendKey’s lending practices are predatory. They operate in a way that creates very firm and immovable lending terms. As a result, the lenders are very inflexible to the point of being rude about any requests you have.
- Lendkey has a habit of making you think you are going to get your loan, having you run through all the documentation and having you do things such as scan your ID, only to tell you that the lender is now unable to provide you with a loan. It is a viciously common occurrence, but a number of people apply for loans with Lendkey, are led to believe they are getting a loan from Lendkey, only to be turned down part-way through the application process.
- Some students consolidate their student loans which also includes government (state) student loans. In most circumstances, this weeks against the best interest of the student. Be very careful if you are planning on consolidating all or some of your state (government) loans because you lose the protection that state/government student loans offer.
- There is no form of unemployment protection. This means that you will start seeing damage to your credit rating as soon as you start missing payments.
- Lendkey offer student loans for up to ten years. People who are taking on more expensive loans may find this fact troubling because it means the borrower is forced to pay more per month than he or she may be willing or able.
- You only have the option of variable rates. This is good for the Lendkey company because it allows them to more easily attract new lenders, but it may not work in the borrower’s favor. Many student loan companies offer the choice of a fixed or variable rate.
- Lendkey is a loan matching company, which means your experience is only as good as the lender dictates. It almost makes LendKey’s online reputation shedable because if they set you up with a lousy company, then it is the company that receives the bad reputation and not Lendkey.
Conclusion – Is Lendkey Right For Me?
If you cannot get federal/government loans, or if you are looking for a private student loan, student refinancing, or a home improvement loan, then you should consider Lendkey.
I am not head-over-heels in love with Lendkey, but oddly enough, it has two factors I really like. Firstly, they allow you to repay early without charging you extra fees. Secondly, they limit loans to ten year terms. I think this is marvelous because it forces students to consider cheaper colleges and Universities, which are typically the ones that are not gouging students. Plus, the benefits of being out of student debt just ten years after you graduate is out-of-this-world ideal for people who wish to build wealth. The earlier you get out of student-loan debt…the better. Warren Buffet was out of student-loan debt before he even graduated college.
If you are looking at student loans, student-loan refinancing, or a home improvement loan, then add Lendkey to your list as you are shopping around. Shop around a lot before you settle on Lendkey because there may be better deals out there for you that better suit your needs.