Online lender touts new personal credit line as HELOC alternative

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The first online lending firm Renaud Laplanche founded, LendingClub, targeted consumers with hefty credit card balances, offering them the opportunity to refinance at a lower interest rate.

In his latest venture, Laplanche hopes to lure customers before they rack up big credit card bills. Upgrade, the San Francisco-based online lender that he founded in August 2016, is rolling out a new product that is designed for folks who are anticipating big expenses but are not sure exactly how much they will need to spend or when.

One example might be a homeowner who is planning a small home-improvement project, but is not sure when it will be finished or how much each step will cost, and does not want to wait to be approved for a home equity line of credit.

Upgrade's product, which is expected to be available by midyear, is a hybrid between a traditional credit card and an unsecured personal loan. It will feature a credit line of up to $50,000 that can be accessed in increments of whatever size the borrower needs.

But unlike a credit card, the balance will get converted into an installment loan at the end of the month in which the borrower draws on the line. The installment loan will have a fixed interest rate and a term of up to five years.

“I think what we came up with is really a third way,” Laplanche said in an interview.

Upgrade unveiled its personal credit line at the LendItFintech USA conference in San Francisco on Tuesday.

The credit lines will carry annual percentage rates of 6.46% to 35.89% and Laplanche said that he expects the average rates will be in line with those charged on Upgrade’s personal loans, and to be lower than the rates available on credit cards.

By the end of the year, Upgrade plans to make the personal credit line available on plastic cards and in mobile wallets.

Laplanche, an online lending pioneer, founded San Francisco-based LendingClub 12 years ago. He shepherded the company through its initial public offering in December 2014 but was forced out just 17 months later.

His ouster was prompted by an internal investigation that found certain loan information had been falsified. In February, LendingClub announced that it has agreed to pay $77.25 million to settle multiple shareholder lawsuits, which alleged that the company inflated its stock price by concealing operational shortcomings.

Laplanche founded Upgrade just a few months after leaving LendingClub. The company started offering personal loans in April 2017, and is currently originating about $100 million in loans per month, according to Laplanche.

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Consumer lending Marketplace lending Fintech Renaud Laplanche