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Green Note

P2P student loans have exploded onto the scene this past year, due in a large part to a lack of availability of traditional loans. There has never been a better time for a p2p site to start offering student loan assistance, and Green Note is one of the newest entrants into the marketplace.

The concept here is pretty simple. A student signs up for the service and fills out a profile stating how much money they need for their education. They can either set up or join a community to try to get assistance. Emphasis is placed on inviting your own friends and family to your community, so it is not clear on whether or not you will be able to seek outside assistance for your loan as a borrower.

Once you have your network built up and you have people that are ready to fund your education, they go through the process at Green Note to fill out all of the paperwork. All loans carry a 6.8% fixed rate and will be due upon graduation. This could cause problems for those looking for an instant return on their investment, but the site is pretty clear about what lenders can expect.

We liked the fact that this site caters to students, regardless of their credit history. Basically, if your community feels you have merit, you’ll have a pretty good chance of getting funding for school. They also focus on having several people lend on one loan, which does spread the risk around quite a bit. It’s similar to going to a family reunion and hitting up all of your relatives for a few bucks, only a lot more organized.

There is a lot of protection here for lenders and we appreciated the fact that they are formalizing the P2P process to make it safer to lend. We would have liked to see a little more information on how collections are handled, but overall, it’s clear that Green Notes has everyone’s best interests at heart.

One very interesting point is that no co-signers are needed for a loan and that citizenship is not necessary. While this is terrific for foreign students that have decided to study in the US, it does raise some concern for lenders, especially if the student returns to their home country and it is impossible to reach them. There is a potential for abuse here, and this was probably our main concern. However, given that the site is still in formation, we’ll give them a chance to address this point.

Overall, Green Note is perfect for those that already have a good community of family and friends that are interested in lending towards their education. It’s not really meant to be a way to find new people to help with funding, but it does help bring these communities together and make the entire process of lending money a lot safer for everyone involved. It will be interesting to see how this site grows over the next few months and how well it is received.

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CommunityLend.com is still in their beta phase, and has yet to fully launch yet, but they do have some interesting features that are already obvious. Like most p2p lending sites, they are striving to create an alternative to traditional bank loans, but they are also trying to take that to the next level by developing actual online communities both for borrowers and lenders.

The premise of CommunityLend is that the more competition there is for your loan, the less interest you’ll have to pay. This should really appeal to those who are trying to save money on their loans, or have been turned away by traditional lenders. While there information is not yet complete, it does appear that the site will be catering heavily to borrowers.

Lenders however will still be taken care of. We appreciated the fact that they pointed out that only a select few are allowed to take advantage of the benefits of lending in the traditional standard. By creating this type of site, they hope to open up the billion dollar lending industry to smaller investors and groups that are looking for a solid way to make money.

While it is not yet clear if there will be any restrictions for borrowers, such as a minimum credit score, the site does appear to be trying to link up borrowers with very affordable loans. The main focus appears to be on small, unsecured loans for things like paying off a wedding or managing debt, but it could conceivably be used for cars, student loans and other financial needs.

The online community feature is quite interesting and appears to be centered around the goal of bringing charitable and local organizations together online, where they will be able to reach out to those in need. Once communities are created, they are free to get new members to join, and there will be features for discussion, learning and more.

The company has already arranged for multi-million dollar funding and their About Page reads like a veritable who’s who in banking and interest business. We found their roster to be very impressive and it looks as though the company is going to be in very good hands. Even the best concepts can falter with a lack of leadership, and it appears as though CommunityLend should be able to avoid that issue.

There are no set launch dates yet, but the company has moved quickly since receiving their financing in December of 2007. Borrowers, lenders and communities can sign up for more information and news on when the official launch will take place. Given that they have built a very strong foundation so far, they should not have any problems succeeding in this market place.

We liked the ideals behind CommunityLend and wish them well on their journey to becoming a p2p lending destination. We’ll be watching with interest to see how they develop and carve out their niche in this competitive industry. It will definitely be interesting to see how they progress.

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This year, it has never been more difficult to get a student loan, thanks to new federal regulations. Hundreds of lenders announced that they would no longer be taking part in federal loan programs and schools are struggling to try to offer loans directly to students. This opened up a huge marketplace in the p2p sector for student loans, and business is definitely booming.

Fynanz.com is probably one of the best known p2p student lending marketplaces in the business and they have built up an impressive track record. The process is actually quite interesting and so far, they have been very successful with placing student loans with those that need the help. In brief, a student will need to join the Fynanz.com community, and then set up what amounts to an online auction.

This auction details the student’s loan request, and further information about why they need the money. Once the auction starts, lenders in the community bid on the loans. In order to place an auction, Fynanz.com first has to verify the identity of borrowers and lenders, and will underwrite the loan request. After the auction is complete, the lender supplies the money, which is then disbursed by Fynanz.com to the student and the school of their choice.

The process goes quite quickly and it’s very easy to get everything set up. Fynanz.com uses something called FACS to assist them in underwriting loans. What this means is that students are ranked according to risk, and assigned rates. Academic scores count heavily on this, as well as the student’s background. For those under the age of 21, a cosigner may be required to complete the loan.

We found it interesting that Fynanz.com decided to calculate risk on an academic model rather than the traditional credit scoring model. Rankings range from 500 to 820, much like FICO scores, and if a student’s FACS ranking is below 640 they will not be able to arrange for a loan through the service. Apparently, the company has found that grades are a very good indication on whether or not the loan will be paid, and they have had a lot of luck using this scoring method.

At the end of the day, this is a very fair way to determine whether or not a student should have a loan. This removes any economic barriers between students and focuses on their actual academic performance. It will be interesting to see if this model expands beyond p2p lending and into traditional banking.

The higher the FACS score, the lower the interest rate, which is also quite fair. For students that rank in the top tier, the margin range is 2.5% to 3.7%. This changes to 7.2% to 7.9% for scores that are in the 640 range. If there was ever a reason for students to focus on their grades, this is a pretty good one.

Fynanz also provides either partial or full guarantees on the original loan amount. The guarantee percentage is dependent on the FACS Grade of a loan listing.

While in enrolled in school at least half-time, a borrower may choose between different repayment options:

• Deferred Repayment Option or academic deferment - while in academic deferment the borrower is required to make monthly $25 Good Faith Payments. The Good Faith payments made while in academic deferment help the borrower establish a good relationship with lenders and demonstrate financial discipline. A six month grace period is given after separating from school.
• Interest Paid Option – full monthly interest payments are due on the loan while enrolled in school. Choosing the Interest Paid Repayment option can save thousands of dollars in interest expense over the life of the loan, because the $25 monthly Good Faith payments will likely not be enough to cover the interest accrued on the loan.

In either option mentioned above, monthly principal and interest payments will be due once loan repayment begins. We realize that some students may not yet have found employment even after six months; therefore, borrowers may request to pay just the interest expense on the loan for the first two years of repayment, “Initial Interest Only” option.

We liked Fynanz.com’s methods and have placed 2 bids on listings as of this morning… One is a platinum plus and the other a gold honors…

They also have a very attractive lending bonus as well. $25 bonus once you successfully lend to a borrower (you must sign up with a referral link to receive the bonus and in doing so the referrer would also receive $25). A 3% bonus when you lend $3,000 (that is a minimum bonus of $90 on $3000 lent.) If you lend $3K and refer 5 people the bonus is retroactively increased to 5% in addition to the $25 per referral. This is a very attractive bonus offer and one that I encourage all RateLadder readers to consider.

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• Green Note Review [caption id="attachment_877" align="alignnone" width="468" caption="Green Note"][/caption] P2P student loans have exploded onto the scene this past year, due in a large part to a lack of availability of traditional loans. There has never been a better time for a p2p site to start offering student loan assistance, and Green Note......
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