Pros & Cons
- Able to fund a loan the day you apply.
- Potentially zero-interest financing.
- Offers joint loan option.
- Charges fee up front.
- No secured loan option.
- Must work with a contractor that uses GreenSky.
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Full Review of Greensky
In March 2022, GreenSky was acquired by Goldman Sachs, which offers its own personal loan product. Product details may change.
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 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.
GreenSky rates and terms
Deferred-interest loans: 17.99% to 29.99%.
Reduced-rate loans: 0% to 29.99%.
Deferred-interest loans: Promotional period of 6, 12, 18 or 24 months; followed by terms up to 7 years.
Reduced-rate loans: 5, 7, 8, 10 or 12 years.
Customers may be charged a $39 account activation fee at time of first purchase.
How to qualify:
Minimum credit score: None, but typically above 700.
Available in all 50 states.
How GreenSky works
Let’s say you’re remodeling your kitchen and the contractor doing the work offers financing through GreenSky. To apply via the mobile app, the merchant or contractor submits a scanned photo of your driver’s license barcode to GreenSky, which then auto-populates a loan application. You add your Social Security number, annual income, email address and requested loan amount. The process takes about a minute 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 16-digit “shopping pass” you use to pay your contractor through a point-of-sale terminal.
Customers receive a credit limit that they can spend up to. Most home improvement costs qualify, including kitchen and bathroom remodels, HVAC installations, foundation repairs, flooring, windows and pool installation. Purchases unrelated to home improvements are declined.
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 interest charged during the promotional period, plus interest that accrues on the balance thereafter, over a period of 84 months.
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 29.99%, according to GreenSky.
GreenSky pros and cons
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 originate 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.
Offers joint loans: Borrowers can file a joint application for GreenSky financing, which means both applicants' credit and income will be considered. Adding someone with better credit than you can help improve your chances of approval. The company doesn’t allow co-signers, though. A joint borrower shares access to the funds from a loan, but a co-signer doesn’t.
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: GreenSky has more than 300 complaints in the Consumer Financial Protection Bureau complaint database in the last two years, with customers citing credit reporting issues and unexpected interest and fees.
What to know about GreenSky
In July 2021, the Consumer Financial Protection Bureau ordered GreenSky to cancel up to $9 million in loans and pay a $2.5 million penalty for "enabling contractors and other merchants to take out loans on behalf of thousands of consumers who did not request or authorize them," according to a news release from the CFPB. The loans ranged in amount from a few thousand to tens of thousands of dollars.
According to the CFPB, GreenSky received at least 6,000 complaints between 2014 and 2019 from consumers who said they had a loan with GreenSky, but didn't authorize an application for one. Internally, GreenSky found that in at least 1,600 instances, merchants that use GreenSky were at fault.
The company failed to incorporate controls into the loan application and funding processes that would have prevented unauthorized borrowing, the CFPB's news release said. It also lacked merchant training and oversight and failed to effectively manage consumer complaints about the issue.
Alternatives to GreenSky
GreenSky is one option for financing home improvement costs. Consider these alternatives before deciding:
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. Unlike with Greensky, you won’t be retroactively charged interest if you don’t pay the balance before the promotional period ends.
Home equity loans and HELOCs: If you have equity in your home, consider a home equity loan or line of credit.
These financing options have lower rates and longer repayment terms. The risk is you can lose your home if you fail to repay the loan.
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. Most online lenders also let you pre-qualify with a soft credit check, allowing you to see your rate and terms with no impact to your credit score.
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.
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