FinTech Upgrade Expands Services to Include Consumer Auto Loans

Upgrade is expanding its services to include consumer auto loans.

To kickstart its auto lending business, the San Francisco-based FinTech company will initially make its offering available to a group of 30 car dealers in California and Oregon, Bloomberg reported Wednesday (Aug. 30).

It plans to target a wide range of consumers, including those with FICO scores as low as 580, according to the report. The firm already offers auto loan refinancing.

Reached by PYMNTS, an Upgrade spokesperson confirmed the report and added that about 80% of Upgrade’s dealers are franchise dealers and the other 20% are independents.

“Upgrade attempts to combine the automation of FinTech lender with a more personal relationship with dealers reminiscent of traditional lenders,” the spokesperson said in the email. “The tag line of their auto product is ‘driven by relationships.’”

With this move, the company is filling a void left by traditional banks that are retreating from the sector due to concerns about credit quality, according to the Bloomberg report. 

Upgrade CEO Renaud Laplanche believes that the strong demand for cars post-pandemic, coupled with historically high used-car prices, presents an opportunity for the company to enter the auto lending market, the report said. Laplanche noted that some banks have already pulled back from the business, while others have tightened their lending standards. This creates an opening for Upgrade to provide competitive loan options.

The FinTech company has an advantage over other lenders as it has access to multiple sources of funding, including credit unions, banks and asset managers, per the report. Laplanche mentioned that Upgrade currently has relationships with asset managers and credit unions that buy the loans after they are originated, which means that securitization may not be necessary for the company. 

Upgrade’s latest expansion of services comes about a month after the firm said it is paying $100 million in cash and stock to buy Uplift, a provider of buy now, pay later (BNPL) payment and credit options focused on travel.

The travel vertical serves as a runway to expansion, adding Uplift’s 3.3 million customers to Upgrade’s installed consumer base of 2.5 million, Laplanche told PYMNTS’ Karen Webster in an interview posted July 27.

“Many of the Uplift customers will want to have access to Upgrade’s products,” Laplanche said at the time. “If we do this well, there are ways to deliver tons of value to consumers.”