ZestFinance, the financial technology company with a focus on credit scoring, said Wednesday (July 15) that it is moving into the near-prime consumer loan market.
According to a Wednesday release from the company, ZestFinance is debuting Basix, an online loan offering that it says will “provide much-needed credit for millions of middle-class Americans often denied loans by banks.” That new product will be powered by the company’s machine-learning platform, which has been used to make credit decisions using a multitude of variables – in this case, tens of thousands of variables — according to the company.
ZestFinance said in its release that the near-prime market serves as a challenge to lenders. Basix, via unsecured personal loans, will be available for three-year terms at what ZestFinance said would be annual percentage rates ranging from 26 percent to 36 percent. The loans will be fixed, which of course indicates that payment amounts and the percentage rates will not change. There will also be a 15-day grace period for payments. Loan amounts will range from $3,000 to $5,000.
The company said its initial Basix availability will cover Alabama, Georgia, Missouri, New Mexico, South Dakota and Utah. ZestFinance is eyeing a nationwide rollout later in 2015, according to the release.
The company said its application process will be a simplified and transparent one with an option for consumers to save money by paying back the loans early as well.
ZestFinance also said it would make the Basix platform available to other lenders.
"Our technology enables lenders to transform how they make credit decisions and, in doing so, meet the needs of millions of people who are currently underserved by banks,” said Douglas Merrill, ZestFinance chief executive officer, in the release. “By helping other companies make more accurate credit decisions, we can greatly expand the availability of fair and transparent credit and transform consumer lending."