Question
Fintechs need to pay their partner bank the bulk of the interest, so do they just make money on the small spread; let's say 2%?
If a credit builder loan is only $1,000-$1,500 they would only make $20-$30 per customer?
Answer
The revenue that fintechs make from issuing a credit builder loan can vary widely based on several factors, including the interest rates charged, the loan amounts, the repayment terms, and the overall risk profile of the borrower. Generally, fintechs may earn revenue from interest charges, fees, and other charges associated with the loan. However, specific figures would depend on the fintech company's business model and the terms of the loans they offer.
