Creditas Soluções Financeiras, a Brazilian FinTech firm focused on low-interest secured consumer loans, has obtained $19 million in funding that will allow it to provide borrowers with funds for one-fourth of what they pay to domestic lenders.
This new round of Series B funding comes amid a boom in local FinTech financing, according to Reuters. Two months ago, Redpoint and other firms dropped $80 million into Nubank, whose platform charges a fraction of the 400 percent-plus average interest rate that card loans carry in Brazil.
The São Paulo-based Creditas helps consumers with heavy debt substitute unsecured loans with funds that charge one-fourth to one-half of what banks and rival local FinTechs do through its use of innovative credit scoring systems and borrowers’ assets. It originates loans using the borrower’s home or automobile as collateral and secures loans from investors or through partnerships with other traditional financial institutions.
This round of funding for Creditas drew investors that included the World Bank’s International Finance Corp., Naspers Ltd.’s FinTech arm and Brazilian venture capital firm Redpoint Ventures. Redpoint had already taken part in a $7.5 million round for Creditas in June.
This latest round of financing will allow the company to develop new distribution channels and cut the minimum interest rate on secured loans to a monthly 1.99 percent from 2.15 percent previously. The average consumer lending rate in Brazil now stands at about 7 percent.
“With the new round and joint efforts to distribute secured loans, I’m certain we can increase participation of this type of loan in Brazil’s credit market,” Sergio Furió, founder of Creditas, said in a statement.