Fynanz.com offering students private loans

By Michael Logli

Students looking for private loans to help pay for college now have a new option that does not involve going through a bank.

“It’s a new alternative,” said Neal Coxworth, director of marketplace development at Fynanz.com. “The students have a tremendous amount of control.”

Fynanz.com, which launched just more than one month ago, is a “peer-to-peer loan marketplace,” that offers a student with no credit history the opportunity to apply for private loans funded by private lenders, Coxworth said. A student can apply for the loan and anonymously post their desired amount, desired interest rate and the school they attend.

Lenders then choose which students they wish to sponsor, the amount of money they are willing to lend and the interest rate. Once this is established, students can choose which lenders to borrow from. Students can borrow money from more than one lender, and lenders include parents, teachers and alumni, Coxworth said.

Coxworth said that by using this method, a student can apply for a loan with no previous credit history required, and they have a better chance to get a more competitive interest rate. However, Coxworth does not guarantee that the interest rate would be lower than private loans through banks, and Fynanz has a 30-day guarantee policy that allows the student to return the loan with no harm done.

“We are a lot like any other student lender,” Coxworth said.

Before applying for private loans, Coxworth said, a student should still earn as much money from the Free Application for Federal Student Aid and government resources as possible. But Coxworth added that he believes private loans will become more popular in the future, and Fynanz can help students by eliminating bank involvement.

“While the amount of funding is staying the same, the need is great and increasing,” Coxworth said.

Dan Mann, director of the Office of Student Financial Aid at the University, said the private loan market is changing drastically because of banks and private loan companies filing for bankruptcy. Many banks have been dropping out of the private loan market because they have not been making profits.

The Education Resources Institute, a non-profit organization that guarantees private loans, recently went bankrupt, and it is impossible to tell the effect this will have on the private loan market, Mann said.

“The whole landscape is changing on a daily basis,” Mann said.

Mann does not know much about peer-to-peer loan sites such as Fynanz, but he said he believes they will not work because they lack stability and security. Mann said he believes eligibility requirements for private loans may become harder in order to cope with increasing demands for private loans. This would ensure banks receive a profit on loans during repayment.

“As costs go up, students will be more challenged,” Mann said.