Lendup and the Payday Industry
Many in the world see an increasing rise in the need for loans and debt for schooling, vehicles, and education. As such, different loan providers cater to each or a wide variety of segments depending on their risk appetite.
There are great lenders and then those that are more like loan sharks. The latest iteration of loan sharks may be that payday loans. This segment of the lending industry has taken much flack because of their potential for prying on those in troubled financial situations.
Silicon Valley has seen this problem and has responded with a solution.
What You Need to Know about LendUp
Based in San Fransisco, and Virginia, LendUp is a company that’s “on a mission to expand access to credit to the half of Americans shut out or mistreated by traditional lenders and help them get on a path to better financial health.”
That’s undoubtedly an ambitious mission and one that they’ve executed rigorously on.
According to a survey by FDIC, at least 20% of the total United States population (which is approx 327.00 million) is under-banked. That’s a significant market and is quite likely one of the reasons why the company was funded.
The startup is backed by the widely popular incubator Y-Combinator and has additional investors that include Google Ventures, a16hz, notable venture firms such as Kleiner Perkins and others. LendUp has more than 200 employees and is on pace to add more to its rapidly growing venture.
LendUp positions itself as a quick lending provider that cares about the end customer. It seeks to differentiate itself in a market that’s filled with “unfair and limited” options with “predatory prices and unclear terms.” Those who use traditional options might find themselves in a cycle of debt, leading to adverse outcomes.
How LendUp Fixes The Industry
LendUp takes a different approach.
The company provides “socially responsible” credit cards and loans that range from $100 to $500 that can go up to a little over a month. The entity seeks to disrupt the industry by providing education and compelling tools to enhance the lives of its users.
A prime example of an innovative solution is that of the LendUp Ladder. Consumers can access loans at lower rates as they progress on their financial journey; they learn more about their needs and manage their finances in a more holistic fashion.
LendUp also provides the Arrow Card and the L Card as a substitute for fee harvester cards helping to simplify consumers’ lives.
Interest rates are still high but speed, convenience and transparency in terms are potential reasons for choosing LendUp as an option.