Frequently Asked Questions | |
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How does the lending process work?
A lender creates and verifies their account
information. They then link their bank account to
their Fynanz account. Lenders may then view the loan
listings and decide which loans to bid for. The winning
bids will be shown with each listing.
What are Pledge Bids?
A Pledge Bid is when a lender places a bid without having
the funds in their account. After placing a pledge bid,
the lender must transfer money to the Fynanz account at
least 5 days prior to the date the loan listing bid on
is set to expire or the bid will be cancelled. This
feature is provided so that lenders do not need to have
funds in their Fynanz accounts at all times. Banking
regulations make it difficult for Fynanz to pay interest
on any money not lent sitting in a lender's account. This
feature gives lenders more control over their money.
Are the loans guaranteed?
Yes, loans are wholly or partially guaranteed by the no-recourse guarantee fund in the event of borrower default. This fund was created by Fynanz because we want lenders to feel comfortable lending in the Fynanz marketplace. The guarantee is
determined by the FACS grade of the loan and ranges
from 50 – 100% of the amount lent. Higher
FACS grades result in higher guarantees by Fynanz, as
shown below. Loans with lower FACS grades typically pay
a higher interest to the lenders for assuming the
risk.
How can I reduce risk and increase returns?
A lender can minimize risk and increase returns by
diversifying a Fynanz loan portfolio across various
FACS grades. We also suggest lenders bid small amounts
across many loan listings, rather than large amounts
over a few listings. A fast and simply way to build a diversified
portfolio is to use
Smart Bids.
Can a lender collect on late payments?
A lender should NOT contact a borrower to collect late
payments. Every state has rules and regulations
relating to collections which must be followed. Fynanz
will attempt to collect all late payments and pass
along 30 day delinquent accounts to a licensed
collection agency.
What happens if a borrower does not pay?
Fynanz will attempt to collect the late payments
through our primary contacts. Borrowers who do not pay
after repeated attempts will be referred to a
collections agency and their non payment will affect
their credit rating. Delinquent and defaulted borrowers
will be banned from using Fynanz again.
Should a loan become 120 days late, Fynanz will make arrangements to sell the loan. The net proceeds will be passed along to lenders. Fynanz will also pay a lender any difference between the amount that is guaranteed for the loan and what has been received.
How does a lender evaluate loan listings?
Lenders will review the borrower’s FACS grade,
listing description, school, and other criteria. Lenders
will be able to see the bid history on each loan. This will
give an indication of the bidding range for the loan
listing.
How long must I hold the loan?
Lenders have the ability to hold the loan until maturity.
Should a lender prefer to not own the loan until
maturity, Fynanz may periodically, but is not required to
offer to repurchase the loan at a small discount to face
value, as long as lenders have held the loan for at least
one year. The price can range between 90%-100% of the principal
balance plus any accrued interest. The decision to purchase and
the purchase price depend on many factors including, but not
limited to, the repayment history of the loan, the remaining
term, outstanding delinquencies, market conditions, and the FACS Grade.
How much can a person lend?
The minimum loan amount is $50 per loan, with higher
amounts bid in $25 increments. There is no maximum to
how much a lender can bid on a loan. However, the maximum amount an
individual can lend across all loans is $2 million, and the maximum
amount an institution can lend across all loans is $50 million.
When will a lender begin receiving payments?
This will depend on the repayment option selected by the borrower.
If a borrower chooses Interest Paid, the lender will start receiving
monthly interest payments immediately. If a borrower chooses Deferred
Repayment, the lender will receive monthly $25 Good Faith payments
immediately. In either repayment option, once the borrower enters
repayment status (typically 6 months after leaving school), the lender
will receive full interest and principal payments. All monthly payments
will be made to Fynanz and deposited into the lender’s Fynanz account.
How are winning bids decided?
Winning bids are determined as follows: First, the
interest rate offered, from lowest to highest. Second,
the type of lender. If two or more bids are offered at
the same interest rate, then the lender with the higher
“bid priority” wins. Third, the time the
bid was placed among lenders of the same type, if the
lenders offered the same interest rate.
Fynanz has a “bid priority” that ranks the four types of lenders in the following order: the highest priority lenders are friends and family of the borrower; then alumni of the borrower’s school; third are unaffiliated lenders; and fourth is Fynanz itself.
How can Smart Bids help with building a portfolio?
Smart Bids have the ability to speed-up the lending
process by allowing lenders to make bids based on
pre-set criteria. With Smart Bids, lenders can bid
equal dollar amounts on multiple listings at one time
at different rates.
Are there any conditions where borrower will not be
responsible for repaying the loan?
There are certain modification events (such as death,
personal disability, or school closure) where borrowers may
request help if they are unable to honor the loan obligations.
If a borrower dies, Fynanz will discharge the estate of any
responsibility to make further repayments. The borrower,
or person representing the borrower, may request
forbearance, discharge or modification of loan terms if the
borrower becomes permanently disabled. Additionally if the borrower's
schools shuts down, temporarily or permanently, there will be different
options a borrower may pursue in this situation, such as asking for modified
loan terms or total discharge of the obligation. Fynanz will
examine and evaluate these requests to determinee
an appropriate course of action.If Fynanz chooses to release the borrower partially or entirely, the lenders will be entitled to reimbursement from the Guarantee Fund for the remaining guarantee amount less the outstanding note amount. Please refer to the Lender Agreement for further information.
What are the risks of lending?
Consumer lending carries a
certain degree of risk.
The Guarantee Fund is designed to address borrower default risk, as well as, in certain circumstances,
the risk of default associated with borrower death, total and permanent disability, or school closure.
Fynanz has also implemented strong anti-fraud and identity verification systems to
minimize privacy and security risks. All Fynanz systems are protected by SSL
(secure socket layer) technology. Review our privacy policy.
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