Fynanz Scores $6.5 Million For Peer-To-Peer Student Lending Platform
Fynanz, which launched in 2008, applies the peer-to-peer lending model of starups like Prosper to student loans. Students can apply for loans and participants can help fund these loans. Unlike Prosper or other P2P lending sites, Fynanze guarantees each loan. And since they are qualified educational loans, the students can deduct the interest from their taxes once they start paying back. To reduce its risk, the startup looks at other factors in addition to credit scores when evaluating each student borrower, including grade point averages and what school the student is attending.
The loans are co-payable to the school, and Fynanz takes into account tuition and other expenses to make sure students don’t take out more than they actually need. The plus for the student is that loans are offered to students with low interest rates, often 0.60% to 1.0% lower than what a student would get from a bank. Fynanz faces competition from fellow student lending platform GreenNote.