Upgrade Expands Services to Offer Consumer Auto Loans in FinTech Evolution

San Francisco-based FinTech firm, Upgrade, has unveiled its latest venture into the financial services landscape by adding consumer auto loans to its repertoire, according to PYMNTS. The company, recognized for its innovative approaches, intends to commence this new initiative by collaborating with a select group of 30 automobile dealerships in California and Oregon. This strategic move is aimed at redefining the auto lending landscape, targeting a diverse range of consumers, including those with FICO scores as low as 580, thus catering to a broader demographic.

In response to this development, an Upgrade spokesperson confirmed the expansion plans and highlighted that the majority of their dealer network comprises franchise dealerships, with the remaining being independent entities. The spokesperson emphasized that Upgrade’s unique selling proposition revolves around amalgamating the efficiency of a FinTech lender with a personalized dealer-customer relationship akin to conventional lenders. Evidently, the company’s auto loan product is centered around the motto ‘driven by relationships.’

This strategic maneuver by Upgrade addresses a void left by traditional banks, which have gradually retreated from the auto lending sector due to mounting concerns regarding credit quality. CEO Renaud Laplanche underscored the compelling market opportunity resulting from the combination of heightened demand for automobiles post-pandemic and historically elevated used-car prices. He noted that while certain banks have curtailed their auto lending endeavors, others have imposed stricter lending criteria. This backdrop presents Upgrade with a favorable opening to deliver competitive loan solutions.

Noteworthy is Upgrade’s unique advantage within the lending landscape, enabled by its access to diverse funding sources encompassing credit unions, banks, and asset managers. Laplanche highlighted the company’s existing partnerships with credit unions and asset managers, which facilitate loan acquisition following origination, potentially negating the need for securitization.

This strategic expansion aligns with Upgrade’s recent acquisition of Uplift, a prominent provider of buy now, pay later (BNPL) services in the travel vertical. The acquisition adds a substantial 3.3 million customers from Uplift’s base to Upgrade’s existing consumer portfolio of 2.5 million. Laplanche acknowledged the mutual benefits of this acquisition, envisioning significant value delivery to consumers seeking access to Upgrade’s diverse suite of financial products.

As Upgrade ventures into the realm of consumer auto loans, it demonstrates the company’s commitment to continuous innovation and strategic evolution within the FinTech sector.