Did You Pay Excessive Charges on Your GreenSky Loan?

People have been spending a lot more time at home in 2020 because of the novel coronavirus pandemic, and a lot more time thinking about their homes. That seems to have led to an increase in home renovations.

Home renovations can be costly and even in financially stable times, many homeowners don’t have the kind of cash on hand needed to fund kitchen makeovers or bathroom upgrades. That’s why many choose to take out home improvement loans, like those offered by GreenSky. But some GreenSky customers say the company charges excess fees that they claim are illegal.

What is a GreenSky Home Improvement Loan?

GreenSky is a technology company that pairs lenders and borrowers looking for home improvement loans of as much as $65,000. The company doesn’t lend its own money. A GreenSky loan is underwritten by a bank, but is offered through contractors and merchants who use the GreenSky financing platform, an analysis of the company published by the consumer financial news source The Motley Fool explains.

The company website says it has facilitated more than a million home improvement projects nationwide and works with more than a dozen of the nation’s top banks.

How Does a GreenSky Home Improvement Loan Work?

A GreenSky loan is initiated by a home improvement contractor or merchant who offers it to a customer as a method of payment.

For example, a customer with an outdated bathroom asks a contractor to do a full renovation. The contractor offers the customer a plan for the work and an estimated price. The cost is higher than the customer can afford to pay out of pocket, so the contractor suggests a loan through GreenSky – deferred or interest free financing or a low interest rate loan. If the customer is interested, he or she fills out an application using the GreenSky app on the contractor’s smart phone or tablet and submits it.

On the other end, GreenSky’s technology works to match the customer’s needs with one of the company’s banking partners. If it finds a good match, the credit can be extended immediately. If the GreenSky loan is accepted, the company sends the loan documents to the customer to sign.

“Merchants get the ability to convert customers who are on the fence and upsell other services by offering affordable payment plans. Consumers get the flexibility to pay for a major purchase over time, potentially without paying a dime in interest,” the analysis by The Motley Fool says. “And banks score loan volume with little effort on their part.”

GreenSky benefits by collecting fees from the merchants and contractors on every transaction and through loan servicing fees.

Some GreenSky loans are offered with an interest-free promotional period, during which the customer can repay the loan in full and be charged no interest. Deferred interest loans facilitated by GreenSky have deferral periods of anywhere from six to 24 months an annual percentage rate of between 4.99% and 23.99% if the loan is not fully repaid by the end of the promotional period, according to a review published by the consumer finance information website Nerd Wallet. The way it works is similar to residual interest with a credit card. GreenSky’s reduced rate loan offerings are usually between zero and 26.99%.

Additionally, GreenSky charges a $39 account activation fee.

Did You Receive Excessive Charges on Your GreenSky Loan?

Credit Karma, a well-known consumer credit information service, warns those considering a GreenSky loan to be careful because the terms of a deferred interest loan can be difficult to understand and expensive.

“If you don’t pay your balance in full by the time the promotional period ends, all the interest that would have accrued during that period could be added to your balance,” Credit Karma’s review of GreenSky says. “People who miss the payoff deadline at the end of the promotional period often feel like they’ve been fooled — and can end up with a balance they didn’t expect and possibly can’t afford.”

Nearly 250 complaints have been lodged against GreenSky with the Consumer Financial Protection Bureau, many involving excess charges and deferred interest costs.

Are These Charges Illegal?

A California woman who took a GreenSky loan for home improvements filed a class action lawsuit against the company in 2019 over claims it engaged in predatory lending practices in charging excess fees.

The plaintiff filed the civil action after she claims GreenSky collected an illegal “merchant fee” on her loan despite the fact that she repaid the debt in full before the end of the promotional interest-free period. The fees GreenSky charged were more than allowed by California law, she claims.

Should You File a GreenSky Lawsuit?

Customers who have taken a GreenSky loan for home improvements and found themselves facing excess charges might qualify to participate in a class action lawsuit against the company. Consulting a qualified, experienced attorney can help determine if a borrower has grounds to take legal action.

Join a Free GreenSky Credit Class Action Lawsuit Investigation

If you used GreenSky to finance a home improvement project in Northern California—especially in the Bay Area, including Contra Costa, Alameda, and San Mateo counties—you may qualify to join this FREE GreenSky lawsuit investigation.

Get a Free Case Evaluation

This article is not legal advice. It is presented
for informational purposes only.