Zopa has this week announced its first steps into the world of secured lending in a groundbreaking collaboration with Uber, the on-demand car service.
The partnership means that Uber drivers will be able to buy their vehicles rather than rent them by taking out a competitive loan with Zopa.
The loans will be secured against the cars themselves, and rates will start from 6.9% APR over between three and four years. The actual rate of interest charged will depend on each individual driver’s credit rating, and the upper borrowing limit is £22,000.
From a driver’s point of view, the credit deal should result in lower monthly costs than renting and at the end of the loan period they will own their vehicles outright.
Uber’s innovative business model involves customers using a smartphone app to order cars whenever they need a ride. Uber then uses its network of self-employed drivers to fulfil the request. Payment is handled via the app – no money changes hands, and tipping is not required – and drivers and passengers can give each other ratings based on factors such as punctuality and politeness.
So far the UK service is available in London, Birmingham, Manchester, Leeds and Newcastle, but there are plans for further expansion.
Giles Andrews, CEO and co-founder of Zopa, says: “Partnering with Uber is an excellent move for us as it marks Zopa’s entry into the secured auto-lending industry, allowing us to provide secured loans to a growing market of self-employed customers. This unique commercial deal offers Uber drivers a low-cost loan to fund their vehicle at an affordable monthly cost.”
Andrews adds that the partnership is a good fit between two “technologically disruptive” companies.
“Zopa and Uber are two rapidly growing businesses and this deal is aimed at accelerating the growth of the two companies in the UK,” he says. “As Zopa becomes a mainstream service for consumers, we look forward to helping hard-working people fulfil their goals of owning their vehicles and keeping more of their income in the process.”
Uber’s Fraser Robinson says the Zopa deal is part of an ongoing process to make it as simple as possible for individuals to set up as drivers for the company.
“Our business is based on drivers and their ability to build their businesses on the Uber platform, and as such as such we want to help them get on the road and start working on the Uber platform as cost effectively as possible,” Robinson says.
The loans will initially be funded by one of Zopa’s institutional lenders rather than private individuals. Once an Uber driver has been approved to borrow, they will be able to choose their vehicle from another Uber partner, Jemca, a London-based Toyota dealership.
Full details about the finance option can be found on the Uber Marketplace.