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Updated on Wednesday, June 17, 2015
Updated January 5, 2015
Student loan refinancing is something every student loan borrower should consider and at the very least do the math to see if it can save you money. Mainstreet Credit Union of Olathe, Kansas offers competitive rates, but this option is only available to a small population.
You must become a member of Mainstreet Credit Union before being approved. Membership is available to those who work or live in the greater Kansas City area (Kansas counties: Leavenworth, Wyandotte, Johnson, Douglas, Miami, Franklin and Linn; and the following counties in Missouri: Platte, Clinton, Caldwell, Clay, Ray, Jackson, Lafayette, Cass and Bates). Membership is also open to organizations or businesses located within said counties. Once you’re a member, you’re always a member – regardless of where you live or work. Also note you must go into a credit union to apply for membership. Online applications are not available.
Besides the geographic consideration, it’s also important to note that Mainstreet’s refinancing program operates through LendKey. LendKey offers access to refinance options from 300+ community banks and credit unions. The partnership works because LendKey offers technology and support while institutions like Mainstreet Credit Union can offer low rates.
Mainstreet Credit Union offers a variable rate of 6.00% to 12.25% on a maximum of $120,000 for undergraduate degrees and $160,000 for graduate loans.
- The Minimum Loan Amount – You can borrow as little as $7,500. This is normal for the industry but it’s worth noting. Other institutions only open loans sized at $10,000+.
- Ability to Prepay in Full – A borrower may prepay the loan partially or in full anytime with no fees or penalties.
- Small Payments While in School – Private loans don’t offer the grace periods that Federal loans do. This means you typically need to start paying a private consolidated loan right away. However, Mainstreet lets you choose between making interest-only payments or a $25 monthly proactive payment while in school. Most college students can swing $25/month.
- Cosigner Release Available – After 24 months of full, on-time payments, the cosigner may be released. What happens is LendKey will reassess your credit worthiness. They will check your credit score and employment history and determine if you can move forward on your own. Your cosigner may especially enjoy this part since they may only need to be on the loan for two years, even if you have a 20-year loan.
- No Loan Origination Fee – Yes, you can see a loan offer without paying a dime.
- Fixed Interest Rates Are Not Available – To be fair, only a handful of institutions that use LendKey offer fixed interest rates on student loan refinancing. All of those states are in New England.
- A Cosigner Is Encouraged – In order to get a higher interest rate, Mainstreet encourages borrowers to use a cosigner. If you can’t, or don’t want to get a cosigner, SoFi may be a better option. SoFi doesn’t encourage cosigners. In fact they only ‘occasionally accept’ cosigners. Read the comparison of Mainstreet vs. SoFi at the end of this article.
- Not Every School Is Accepted – Most institutions are accepted so don’t worry about this too much. Luckily, you can check quite early in the application as to whether or not your school will work with this new loan.
- High Interest Rates – Yes, ‘high’ is a relative term, but the floor rate is 6%. LendKey works with other institutions that offer as lower rates.
- Geography – You must live or work in Kansas City upon applying for the loan.
- Income Requirements – Mainstreet’s income requirements are low. But if you plan on taking a year off after school, Mainstreet may not accept you. Without a cosigner, you must prove $2,000 per month of ‘reliable’ income. With a cosigner, you must still prove a reliable income (no dollar amount outlined) and your cosigner must earn at least $2,000 worth of reliable income.
The Fine Print
There’s an ‘Upfront Fee’
This fee is charged at the time of loan disbursement. It gets added into your monthly payment. There’s still no origination fee.
The lowest interest rate is only available if you…
It takes more than an excellent credit score to get the lowest interest rate. You can only get the lowest interest rate if you have an excellent credit score and enroll in automatic payments. If you ever opt out of automatic payments, the rate reduction will discontinue. The rate reduction may also be suspended during forbearance or deferment.
3 Days to Cancel
A borrower only has 3 days to cancel a loan. Some institutions offer 30 days.
Stacking Up Against the Competition
Social Finance, Inc. (known as SoFi) will likely be able to score you an interest rate below 6%. Interest rates start as low as 2.25% variable and 2.99% fixed. The minimum amount you can borrow is $5,000.
As mentioned earlier, SoFi doesn’t default to offering a cosigner. It only ‘occasionally accept’ cosigners.SoFi is definitely worth considering at a variable 2.25% APR.
SoFi has a unique approach to underwriting new loans. They take a more holistic approach than you’ll find with Mainstreet Credit Union. SoFi takes into account professional accomplishments, income, credit score, and employment history. Its goal is to keep default rates extremely low.
CommonBond grabs your attention by touting variable interest rates as low as 1.99% APR. A CommonBond application only takes 7 minutes and has no origination fee. CommonBond offers big loans, with no maximum loan amount. Mainstreet maxes out at $120,000 for an undergraduate loan and $160,000 to finance a graduate education.
While a cosigner is not necessary, your interest rate can be entirely based upon a cosigner’s credit score. What CommonBond does is take the better credit score of the two people and uses that for assigning an interest rate. This could work well if you’re a student with a low credit score and have a parent with an attractive credit score.
Don’t Forget to Do Your Research
The Mainstreet Credit Union student loan refinance program is fair. There are no scary surprises or ‘gotchas’. However, SoFi and CommonBond should be considered as well – especially if your main goal is to secure a low interest rate. You might also want to visit our review of the best places to refinance your student loans here. You should always shop around for the lowest rates before you sign on the dotted line.
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