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GreenSky Credit for Home Improvements: 2018 Review

Aug. 31, 2018
Loans, Personal Loans
GreenSky Credit for Home Improvements: 2018 Review
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GreenSky is a technology company that facilitates home improvement loans up to $65,000. Its loans are funded by banks and offered to consumers through home improvement contractors, merchants and retailers who use GreenSky’s financing platform.

For borrowers who take GreenSky’s deferred interest loan and pay it off during the promotional period, GreenSky is a fast and inexpensive alternative to other options for financing home improvements.

What to know about GreenSky Credit:

  • You need good to excellent credit. GreenSky’s average borrower’s credit score is 770, according to the company. It allows co-signers, which can improve your chances of qualifying.
  • Loans with deferred interest are interest-free — but only if you pay them off during the promotional period. Consumer complaints about GreenSky show that not everyone fully understands how deferred interest works.
  • You can use the money only for home improvement projects. Purchases unrelated to home improvements are declined.

GreenSky Credit rates and terms

Loan amountsUp to $65,000.
APR range
  • 4.99% to 23.99%.
  • Deferred interest periods of 6, 12, 18 or 24 months.
Repayment scheduleDeferred-interest loans: Promotional period followed by 7 years.

Reduced-rate loans: 5, 7, 8, 10 or 12 years.
FeesAccount activation fee: $39 at time of first purchase.
Time to fundingSame day.
How to qualify
  • Minimum credit score: None, but typically above 680.
  • Minimum income: None.
  • Minimum debt-to-income ratio: None.
  • Available in all 50 states.

GreenSky Credit review

GreenSky is not a lender; rather, it’s a financial technology company that partners with banks to originate loans, and with home improvement contractors, merchants and retailers to provide point-of-sale financing.

The company says it works with 13,000 merchants across the U.S. and has facilitated $13 billion in loans since 2012.

How it works

Let’s say you’re remodeling your kitchen and the contractor doing the work offers financing through GreenSky. To apply, the contractor submits a photo of your driver’s license barcode to GreenSky, which then auto-populates a loan application. You add your Social Security number, annual income and requested loan amount. The process takes about 45 seconds to complete.

Once the application is submitted, GreenSky does a hard credit pull. Then, you receive notification that you’ve been declined or approved and details of the loan offer.

If you accept the offer, GreenSky sends your loan documents via email and regular mail. The documents include a 15-digit “shopping pass” you use to pay your contractor through a point-of-sale terminal.

You have six months to use the funds; after that, you forfeit any unspent money. Most home improvement costs qualify, including kitchen and bathroom remodels, HVAC installations, foundation repairs, flooring, windows and pool installation.

Deferred interest or rate reduction

Merchants that partner with GreenSky may offer a deferred-interest or “no-interest if paid in full” option, or a rate-reduction option.

Deferred-interest loan: GreenSky loans with deferred interest accrue interest charges during a promotional period of six, 12, 18 or 24 months. If you pay off the entire balance before the promotion period ends, you pay no interest. If you don’t pay it off, you pay the remaining balance with interest over 84 months.

In 2017, financial advisor Kevin Mahoney took a GreenSky loan with 18 months deferred interest to pay for foundation repairs at his Washington, D.C., townhouse.

“We are paying off the loan incrementally, making sure it’s fully paid off before the promo period expires,” Mahoney says. “The terms can have real consequences if you don’t have a strong plan in order.”

GreenSky claims 90% of borrowers with deferred interest loans don’t pay interest charges.

Sample loan agreement: Looking at a sample GreenSky loan agreement, it shows a current payoff amount of $7,410, which is the amount that must be repaid in full to avoid interest charges. If the borrower doesn’t pay in full, the borrower would have to pay $1,925.82 in deferred interest, which accrued over a six-month period. The borrower would also begin paying 23.99% annual percentage rate on any remaining balance.

Reduced-rate loan: If you need longer to repay the loan, you might be offered a loan with a lower APR and repayments up to 12 years. The rates range from 0% to 13.99%, according to GreenSky.

GreenSky pros and cons

Pros

No-interest loans: GreenSky’s deferred-interest loans are effectively 0% interest loans if the balance is repaid in full within the promotion period. It’s a good option if you know you can repay the balance in full.

Fast funding: GreenSky loans are originated at the point-of-sale, so you can get financing from a contractor or merchant almost immediately — faster than getting a personal loan, which can take a few days, or a home equity loan or line of credit, which can take several weeks.

Cons

Hard credit pull: GreenSky doesn’t pre-qualify applicants; its loan application process includes a hard credit inquiry, which can have a negative impact on your credit score.

Deferred-interest promotion can have consequences: Failure to pay off the loan balance during the promotional period could result in high interest costs over a long period of time.

Negative reviews and lawsuits: GreenSky has close to 200 complaints in the Consumer Financial Protection Bureau complaint database, with customers reporting billing issues and confusion over the deferred interest promotion.

GreenSky says the number of complaints are small compared to the number of customers it has served; it says it’s approved 1.7 million consumers since 2012.

GreenSky was also sued twice in recent years for deceptive business practices by contractors using its financing platform. The company settled both suits and agreed to make several changes to its business practices, including how it assesses prospective contractors.

Alternatives to GreenSky

GreenSky is one option for financing home improvement costs. Consider these alternatives before deciding:

Federal programs: Some government programs can help pay for a home renovation. The Federal Housing Administration has two programs: Title I loans and Energy Efficient Mortgages.

Credit cards: If you have excellent credit and a smaller home improvement project, you can apply for a 0% interest credit card to cover the expenses. If you qualify, you’ll pay no interest charges for a promotional period, typically 12 to 18 months.

» MORE: Should you put your home renovation on a credit card?

Home equity loans and HELOCs: If your credit isn’t great and you have equity in your home, consider a secured loan.

Home equity loans and home equity lines of credit have lower rates and longer repayment terms. The risk is you can lose your home if you fail to repay the loan.

» MORE: Home equity loan vs. line of credit

Personal loans: If you don’t have a lot of equity in your home or you would rather not rack up credit card debt, consider a home improvement loan. These loans are unsecured, with fixed rates and payments, and usually are funded within a week.

» MORE: Compare home improvement loans

Cash-out refinancing: You can refinance your existing mortgage into a higher loan amount and use the difference to pay for your renovation. Rates vary by lender, loan amount and the equity in your home. The interest payments on all types of home loans are usually tax-deductible.

» MORE: Compare home improvement financing options

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