If you have high interest rates on your student loans, refinancing them can be one of the best money-saving moves that you make. However, as we’ve discussed in recent months, the options for refinancing are so vast that the entire process becomes overwhelming.
Today we want to show you another student loan refinancing company who’s making their mark in a unique way. Here’s our WeFinance Review.
Why WeFinance is Different
We’ve covered some peer to peer student loan refinancing options before, but the majority of those were only open for accredited investors to lend in. WeFinance is completely different. In a sense, it is the “Kickstarter” of student loan refinancing.
Here’s the gist of how WeFinance works:
- As a borrower you create an account with WeFinance so that investors can access your profile on the marketplace.
- Your friends and family can then lend you money. Other community members can lend you money as well.
- You get a lower interest rate than what you’d get from a bank and your friends and family get a higher interest rate than what they’d get if they left their cash sit in a normal savings account.
In essence, to get your student loan repayment fund going, you will need to share your profile with your extended network. If you’ve ever seen or been a part of a Kickstarter or Go Fund Me campaign, WeFinance is similar, only the money lent to borrowers must be repaid.
If you’re wondering about the repayment process, WeFinance uses Dwolla which is similar to Paypal. There are no fees for any WeFinance borrower or lender, and all payments are automatic.
Also, WeFinance is completely free for both borrowers and lenders. They don’t take a cut of any of the money!
What About the Interest Rates?
A quick look at the website shows that most borrowers are receiving between 4-6% interest rates.
However, as the borrower, YOU get to set your own terms and interest rate. For instance, when a borrower creates an account, she’ll have the option to set her own interest rate and payback terms. This will be the interest rate she pays her friends, family, and other pledgees who lend her money.
Obviously the higher you set your interest rate, the more people you will have wanting to pledge money to you. At the same time, if you have family and friends earning less than 1% interest with their money sitting in a savings account, they may be pretty happy getting paid a 3% interest rate by you.
The terms and interest rate you set should be based on your own personal situation and the situations of the people you plan on borrowing money from.
Since you are able to set your own rate you may end up paying substantially less in interest than the rate you’d get from a traditional bank.
Is WeFinance for Me?
I’ll be honest here, I don’t think WeFinance is for everyone. If you hate the idea of borrowing money from your own personal network of friends and family, then you’re likely not going to promote your account to get enough funding. And if you don’t want to try WeFinance without borrowing from your personal network, then you’re going to have to set interest rates and terms that will appeal to a wide variety of people – which might be higher than you’d like.
However, for the college graduate who has family members who would love to help while gaining financial benefit at the same time, this could be an amazing fit! It will not only help you save money in interest but also help your network earn more money in interest.
This article was sponsored by WeFinance, but all opinions contained within are our own.
Robert Farrington is America’s Millennial Money Expert® and America’s Student Loan Debt Expert™, and the founder of The College Investor, a personal finance site dedicated to helping millennials escape student loan debt to start investing and building wealth for the future. You can learn more about him here.
He regularly writes about investing, student loan debt, and general personal finance topics geared towards anyone wanting to earn more, get out of debt, and start building wealth for the future.
He has been quoted in major publications including the New York Times, Washington Post, Fox, ABC, NBC, and more. He is also a regular contributor to Forbes.