A new person-to-person social lending Web site aimed at college students struggling to find loans in the post-credit crunch market has been launched in the US.
The new Fynanz service is thought to be the first P2P marketplace in the US dedicated solely to student loans.
Due to the current financial credit crunch, traditional lenders such as banks and credit unions are now declining some student borrowers who would previously have qualified for college loans, says Fynanz, so increasing numbers of students who seek financial aid annually are now looking for alternatives.
The new site allows borrowers to create an online listing with their educational profile, along with a loan and rate request. Students can request unsecured loans from $2500 to $20,000, to be repaid over 10-20 years.
Lenders then place bids on the listed loans based on the student's academic record and background, as well as credit ratings.
"For the first time, students and their parents have control over the student loan process," says Chirag Chaman, founder, Fynanz. "Not only are students given a clear explanation of the costs and terms of their loan; lenders will also have a complete picture of who receives their loan."
Social lending sites are also being used by Americans to pay off credit card debt, with the amount borrowed for this purpose expected to grow from $38 billion in 2007 to $159 billion by 2012, according to a recent study released by Javelin Research & Strategy.