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Nonbank lenders are analyzing reams of data to help decide if they should make short-term loans to cash-strapped consumers who don't qualify for mainstream credit.
July 22 -
The Consumer Financial Protection Bureau on Thursday denied an appeal made by several Native American tribal lenders who were seeking to block a civil investigation into their online payday lending practices.
September 26 -
So far, Washington has generally smiled on tech-driven lenders such as Lending Club and OnDeck. But many in the fast-growing industry are now bracing for closer scrutiny.
May 15
ZestFinance in Los Angeles has introduced a loan product for subprime borrowers whose credit scores nearly qualify as prime.
The online product, branded Basix, will be unsecured loans of between $3,000 and $5,000 and will carry terms of up to three years and annual percentage rates between 26% and 36%. The loans will initially be available in Alabama, Georgia, Missouri, New Mexico and Utah and ZestFinance plans to expand it nationwide later this year.
ZestFinance does not have a loan origination deal in place with a bank and it will keep the loans on its balance sheet. However, CEO Douglas Merrill said he has interest in partnering with a bank.
"To make fair and transparent credit [available more widely] will require partnerships," Merrill said in an interview. Bank charters allow alternative lenders to export loan rates acceptable in their home states.
[Coming this November:
ZestFinance is targeting the loans to middle-class U.S. consumers, which it described as "near-prime," a group Merrill said is often denied loans by traditional banks.
"These folks have credit data that is missing or credit data that is wrong," which hurts their ability to qualify for bank loans, he said.
ZestFinance is expanding to near-prime consumers because of the confidence it has in the lending data it's developed for subprime borrowers, he said.
Defaults were "half what our nearest neighbor's [default rates] were," Merrill said.
