The American consumer credit platform Upgrade introduces a hybrid product, called “Personal Credit Line”, combining personal loans and credit cards. This service has been presented by their CEO, Renaud Laplanche, at the Lendlt Fintech USA 2018 conference. Upgrade bets on a new product intended to meet customers’ expectations in terms of flexibility.
Personal Credit Line allows US customers –depending on profiles’ specifics– to be granted a loan of up to 50,000 dollars over 12 to 60 months (APR ranging from 6.46 to 35.89%). The online subscription process is described as fast and simple: borrowers are in fact granted approval instantly, and are informed to the maximum amount they may be lent at once in a matter of minutes, upon applying online.
Once the subscription approved and completed, customers may request advances on the line. Each cash advance can be compared to an instalment loan, where customers specify the terms. Each monthly payment combines all credit lines. Loans subscribed via Upgrade are released by WebBank, then repurchased by the FinTech and proposed to non-institutional investors, which pertain to the FinTech’s model.
This service is also designed to provide consumers with some flexibility and predictability. It allows them to securely access funds when necessary, and fixed rates apply. It may then be compared to a personal loan which would work like a project planning tool.
Comments – An alternative to credit cards
Renaud Laplanche, founder and former CEO of Lending Club, designed Upgrade as an online platform enabling non-institutional investors to fund consumer credit lines. For borrowers, this platform claims it will help them with managing their personal finances while applying transparent rates and terms. Upgrade now expands their range of offers with a hybrid product, the model of which has already been introduced in several countries.
By way of meeting needs that have emerged from today’s evolving consumption modes, the Australian bank Westpac, for instance, lets their customers convert part of their available funds into a long-term loan based on their credit cards. Likewise, ING Direct proposes a card called “Orange One” for Australian customers, also. It allows them to convert some of the purchases they make into personal loans with flat rates applied. The idea still is to provide customers with more flexibility and visibility. Since Upgrade relies on professional investors, it may address potentially riskier targets –which may even not be addressed by banks. The point is to comply with US expectations in terms of preventing over-indebtedness.