Yrefy Risks: What You Need to Know

• Yrefy only works with distressed private student loans, as federal loans don’t qualify for the settlement discounts they use.

• A hard credit inquiry from Yrefy can temporarily lower your credit report score, although making on-time loan payments can help rebuild it.

• Yrefy charges a 5% fee, which increases the overall loan repayment balance, so it’s important to compare this cost with other service providers.

If you’re dealing with high-interest private student loans, struggling to keep up with monthly payments, or worried about defaulting, it might feel like you’re running out of options. Many student loan borrowers face challenges like poor credit, making it hard to qualify for traditional refinancing solutions.

That’s where Yrefy comes in, offering lower interest rates—starting at 1.0% fixed for terms between 3 and 15 years—and more affordable monthly payments, even if your credit score isn’t the best.

But while Yrefy has some advantages, there are risks you must be aware of. Extending your loan term up to 20 years might reduce your monthly payments, but it could mean paying more interest over time.

There’s also a 5% origination fee that increases your overall loan balance. Plus, applying for Yrefy could temporarily lower your credit score due to a hard credit check.

Let’s take a closer look at these potential risks so you can decide if Yrefy is the right fit for your financial situation.

• Longer Loan Terms: Refinancing with Yrefy can extend your repayment terms to as long as 20 years. While this means lower monthly payments, it also means you could end up paying more in interest over time.

• Origination Fee: Yrefy charges a 5% origination fee, which is added to your loan balance. This increases the total amount you owe, so it’s a good idea to compare this cost with other student loan refinance options.

• Credit Score Impact: Yrefy will perform a hard inquiry, which is when a lender checks your credit report to see if you qualify for a loan. Additionally, if you have a credit card balance, it’s important to consider how that might affect your overall debt picture. Related: Here’s the Credit Score You Need to Refinance Student Loans

• Co-borrowers: If your credit isn’t strong enough, Yrefy allows you to use a co-signer or co-borrower to help you qualify for a better rate. But, this poses a risk because missed payments can negatively affect both your and your co-borrower’s credit scores.

• Lower Interest Rates: Yrefy’s fixed rates, averaging around 3.9%, can help make lower monthly payments more manageable, even if your loan term is extended. This reduces the burden of high-interest rates common with defaulted student loans.

• Flexible Payment Relief: If you hit a rough financial patch, Yrefy’s SKIP-12 program lets you skip up to 12 payments over the life of your loan. This gives you some breathing room while keeping your loan in good standing and avoiding default.This program can offer a safety net for borrowers who may be ineligible for student loan forgiveness.

• Loan Modifications: If you’re facing longer-term financial challenges, Yrefy offers the option to modify your loan again, even if it’s already been refinanced. This can help lower your payments even more—something most lenders don’t offer.

• Credit Improvement Potential: While your credit score might dip slightly from the hard inquiry, Yrefy’s manageable loan payments give you a chance to rebuild your credit report over time.Also, if you’ve been dealing with forbearance, Yrefy’s structured payments can help get you back on track.

Yrefy’s business model works by buying private student loans that are in trouble, usually paying only 35% to 40% of the loan’s original balance. After that, they refinance the loan and charge you a fixed interest rate averaging around 3.9%.

The difference between what they paid for your loan and what you repay (called the “spread”) is how they make a big part of their profit.

In addition to the interest, Yrefy also charges a 5% fee when you refinance your loan. This helps cover costs, increases their income, and supports their investment opportunity.

Yrefy also attracts accredited investors by offering them a guaranteed return of 10.25% on their investments. This is possible because of the interest payments you make. Since Yrefy buys loans at a discount, they’re able to give investors solid returns while still earning a profit themselves.

Because Yrefy manages its own loans, it can also earn money from servicing fees, which come from making sure you make your payments on time.

Yrefy only works with private student loans. They can’t use this business model with federal student loans because the government doesn’t offer the same types of discounts for troubled loans.

To qualify for refinancing with Yrefy, you must meet the following criteria:

1. Loan Type: Yrefy only refinances private student loans that are behind on payments or in default. Federal loans aren’t eligible.

2. Loan Amount: You can refinance anywhere from $5,000 to $350,000 in private student loans.

3. Credit Score: Yrefy doesn’t require a minimum credit score. Instead, they look at other parts of your financial situation, such as your willingness to repay, total student loan debt, and more.

4. Income: You’ll need to have a steady income, but Yrefy doesn’t set a specific income limit. They take a look at your overall financial health.

5. Graduation: You don’t need to have graduated to refinance your loans with Yrefy.

6. Location: Yrefy offers refinancing in 37 states, including places like Alabama, Florida, and Texas.

7. Debt-to-Income Ratio: You or your co-signer need a debt-to-income ratio (DTI) of 35% or lower to qualify on your own. If your DTI is higher, you may need a co-signer.

If you think Yrefy could be the right fit for your defaulted private student loans, here’s a simple guide to get started:

1. Get in Touch

Call Yrefy at (800) 614-8569 during these hours:

• Monday – Thursday: 7 AM – 5 PM MST

• Friday: 7 AM – 4 PM MST

• Closed on weekends

You can also fill out a quick online form to have a Yrefy representative reach out when it’s convenient for you. This gives you time to discuss your options at your own pace.

2. Gather Your Information

Before your consultation, be ready with:

• Details of your current private student loans in default

• Proof of steady income

• Recent bank statements

• Other financial documents that may support your application

3. Application Review

Yrefy will start with a soft credit check, which won’t affect your credit score, and review your overall financial situation. If you decide to move forward, a hard credit check may be required.

4. Get Your Offer

If you’re approved, you’ll receive a refinancing offer within 30-45 days. This offer will outline your new interest rate (usually around 3.9% fixed), loan term, and monthly payments. Be sure to review all the terms carefully before accepting.

5. Finalize Your Refinance

Once you agree:

• You’ll pay a 5% origination fee based on your loan balance

• Yrefy will pay off your defaulted loans

• You’ll start making payments on your new loan with Yrefy

1. Is Yrefy a Legitimate Company?

Yes, Yrefy is a legitimate company specializing in refinancing defaulted private student loans. It’s important to fully understand their fees and terms before moving forward. You might also want to compare Yrefy with other lenders and seek advice from a financial expert.

2. Will I Be Worse Off in the Long Run with Yrefy?

Yrefy offers lower interest rates but may extend your loan term up to 20 years. This can reduce monthly payments but increase the total interest paid over the life of the loan. Compare Yrefy’s offer with your current loan terms to understand the long-term impact.

3. How Does Yrefy Impact My Credit Score?

Refinancing with Yrefy triggers a hard credit inquiry, which can temporarily lower your credit score. Over time, making on-time payments can help improve your score. Just remember, missing payments will hurt your credit since Yrefy reports to all major credit bureaus.

4. What Happens if I Can’t Make Payments After Refinancing with Yrefy?

If you’re struggling, Yrefy’s SKIP-12 program lets you skip up to 12 payments, and they offer loan modifications. But, skipping payments or extending your loan term may lead to paying more in interest. Review these options to ensure they fit your financial needs.

Yrefy can lower your monthly payments, but you should consider the risks. Extending your loan term could mean paying more interest, and the 5% origination fee increases the total amount owed. The hard credit check may also temporarily lower your credit score.

While SKIP-12 lets you skip payments, it could raise your overall costs. Weigh these risks against the benefit of lower payments, especially if you’re struggling financially.

Ready to take the next step? Reach out to Yrefy or book a 1-on-1 call with our student loan experts to explore your options and start moving toward a debt-free future.