How Does FinWise Bank Work? What You Need to Know

FinWise Bank is a small community bank in Sandy, Utah. The company offers traditional banking services like checking and savings accounts. It also provides home loans and business borrowing opportunities.

The bank prides itself on its digital-first philosophy. Consumers can obtain personal and business loans through several online partners. FinWise Bank handles the approval process and services the loans.

Loans available through FinWise Bank’s partners cater to individuals with poor credit. However, the interest rates are extremely high. These loans often come with exorbitant fees.

Should You Apply for a Loan from FinWise Bank?

FinWise Bank offers several types of loans for its customers. These include SBA loans and home equity lines of credit. However, clients must apply for these loans directly at the Sandy, Utah location.

Most people experience problems when applying through FinWise Bank’s partners. FinWise Bank services the loans and establishes payment schedules. People may not realize FinWise is their loan service company. The confusion creates problems down the line.

Through partner organizations, consumers can obtain high-interest loans online. FinWise assists in processing loan applications. The company provides its partners with approved loan amounts, payment schedules, interest rates, and fees.

Poor credit loans often come with high annual percentage rates. Those from FinWise Bank partners are no exception. Companies like RISE may charge APRs up to 299%.

What Companies Partner with FinWise Bank?

Multiple companies partner with FinWise Bank. These include:

• RISE: Offers short-term loans of $500 to $5,000. APRs may approach 299% in some states.
• Upstart: Offers personal loans from $1,000 to $50,000. APRs vary from 5.42% to 35.99%. Accepts applications from individuals without credit history.
• Reach Financial: Provides debt consolidation loans up to $40,000. Rates vary from 5.99% to 35.99%. Payment schedules may last up to five years.
• Empower: A cash advance app targeting people with bad credit. Consumers obtain up to $250 initially. Late payments may incur interest up to 35.99%.
• Edly: A student loan company offering tuition payments to universities. Interest rates may be as high as 23%.
• American First Finance: Offers loans up to $5,000 for goods and services. Interest rates vary.
• Mulligan Funding: Provides working capital to small businesses. Owners can obtain up to $2 million. Repayment terms extend up to 36 months.
• Great American Finance: Offers financing through merchants like furniture stores and medical companies. Interest rates may reach 31.99%.
• Opp Loans: Provides personal loans between $500 to $4,000. APRs are as high as 160%. Repayment terms vary from nine to 18 months.
• LendingPoint: Offers personal loans from $2,000 to $36,500. APRs range between 7.99% and 35.99%.

All FinWise Bank partners are essentially advertising platforms. They are not lenders themselves. Customers obtain loans through FinWise Bank, which underwrites the obligations.

Is FinWise Bank Legitimate?

FinWise Bank is a legitimate, FDIC-approved bank. However, its partnerships with FinTech companies promote high-interest loans. These loans target consumers already in unfavorable financial situations.

Partners like Opp Loans and RISE charge high APRs. Repayment may be next to impossible for financially vulnerable individuals. Their loans are similar to payday lenders.

Edly’s model is also concerning. Students may not realize how much loan repayment will eat into their salaries. The burden becomes clear only after graduation.

Loan applicants may not realize FinWise Bank handles loan servicing. When bills from FinWise Bank appear, borrowers may not recognize the company. The confusion creates additional stress.

Consider an example. Jeff takes out a $1,000 loan with Opp Loans. After a few months, Jeff still hasn’t paid off the loan amount. The high interest hits hard. Jeff falls even more behind on payments. Eventually, he stops paying. Later, Jeff discovers FinWise Bank is suing him. Jeff uses our partner Solo to respond to the lawsuit.

FinWise Bank Has Bad Reviews

The Better Business Bureau notes several complaints against FinWise Bank. Most negative reviews relate to unexpected withdrawals from bank accounts. Consumers also complain about complex repayment plans.

FinWise Bank has a 1.28-star rating with BBB. The company has a 3.4-star rating with Google reviews. Most consumers don’t have positive experiences with the company.

Here’s a real complaint from FinWise Bank’s BBB profile:

“I have had a loan with Rise, which is a Finwise product for over 2 years. As of May 2nd, the account shows a zero balance. For some reason, my account was reported as 30 days past due. My last payment was made on April 29th. I am still well within 30 days of the next due date. All efforts to make contact have not worked. I just separated from the Army and am trying to buy a house. The issue severely affects my ability to do so.”

How Can You Obtain a Loan if You Have Bad Credit?

If you have bad credit and need a loan, avoid predatory lenders. You probably won’t be able to obtain a decent loan if your credit score is below 650.

Instead of looking for a loan, search for other ways to come up with money. Ask close friends or family members for help. Start a side hustle. You may be able to find a part-time remote job. You can also sell things you don’t need.

Often, people believe they can’t make ends meet without a loan. However, you can usually get by on what you have. If you’re facing a severe crisis like foreclosure or eviction, try negotiating with your lender.

You may consider bankruptcy if your current crisis doesn’t appear to be lifting. A Chapter 7 bankruptcy accounts for unsecured debts. However, you’ll need to meet specific income requirements to qualify.

Individuals who don’t meet Chapter 7 requirements may qualify for Chapter 13 bankruptcy. Under Chapter 13, the court puts you on a payment schedule. Once you complete the repayment program, the court discharges remaining debts.

Why Are There So Many Predatory Lenders?

Predatory lending has always been a problem. It’s grown tremendously over the past few decades. Payday lenders began to appear in the 90s and 2000s. Their exorbitant fees put many people into dire financial straits.

Some states created legislation to limit their availability. Not all states followed. Lenders like FinWise Bank exacerbate the issue.

Using its status as an FDIC bank, the company can offer high-fee products. Individuals without other options get swept into a financial mess. Those who don’t understand their loan agreements face serious consequences.

Because of that, you should avoid companies that work with FinWise Bank.

You Should Avoid Partners of FinWise Bank

FinWise Bank itself isn’t a predatory lender. The company offers traditional banking services to Utah customers. It helps local businesses obtain conventional loans like SBA loans and equipment leases.

However, FinWise Bank partners with predatory companies. These partners offer customers high-interest loans. FinWise Bank handles the approval and servicing of these loans. The loans are generally detrimental to clients.

Before taking on any loan, you must understand what you agree to. If interest rates and fees are high, consider other options. If you anticipate difficulty repaying the lender, look elsewhere.

What to Do if You Have a FinWise Bank Debt

When you’ve taken a loan from a FinWise Bank partner, you may struggle. If you can’t afford your regular payments, FinWise Bank may pursue a lawsuit. The company may also send your debt to a collections agency.

However, you can recover from the situation. If you receive notification of a pending lawsuit, our partner Solo can help you prepare your Answer. Submitting your Answer will protect you from a potential judgment.

If FinWise Bank sells your debt to a collections agency, you can use a Debt Validation Letter. The letter compels the agency to verify your debt before contacting you. Many times, collection agencies won’t have enough information. They’ll drop further actions against you.

Once you emerge from a FinWise Bank obligation, avoid further business with the company. Avoid its lending partners as well. Other creditors can help you with fair terms.

Respond to a Debt Lawsuit Against FinWise Bank

If FinWise Bank is suing you, don’t ignore it. You might not recognize the company name. That’s probably because you worked with one of FinWise’s partners instead. The lawsuit is still legitimate.

The first step to defending yourself is responding to the court documents. You need to submit a written Answer. The Answer is your official response to the lawsuit.

You must respond within the deadline stated in your summons. Missing the deadline can result in a default judgment. A default judgment means you automatically lose the case.