The company started the partnership in California in January, and now it plans to expand to 10 major markets across the U.S.
Fair will lease cars to drivers for a $185 refundable security deposit, and drivers can earn that amount in credits from Uber if they complete 70 trips a week with Uber, which will offset the leasing payments.
“Uber wants to really find a way to lower the barrier or the hurdle to getting into a car,” said Scott Painter, Fair’s founder and chief executive officer. “This is designed specifically to attract drivers who may not even have enough credit to get a traditional car loan of any kind.”
Uber sold its subprime-lending unit to Fair in January of last year, and that gave Fair access to about half of Uber’s 30,000 active users. Uber’s lending unit, called Xchange Leasing, piled on losses and was criticized for giving drivers financial obligations they couldn’t meet.
Fair is easier to deal with, Painter said, because drivers can return a car whenever they want and they don’t have to sign a long lease that lasts years.
Also, because Fair owns the car, there’s no traditional financing operations needed — the company simply runs a credit check through a driver’s license.
Uber told shareholders that it’s looking at about $1 billion in Q1 losses. As of Thursday morning (May 30), Uber shares didn’t move much.
When Uber was preparing its IPO, it warned that driver satisfaction would go down as it tried to tinker with its formula and become more profitable.