BankTech

Uber Enters Financial Services With Xchange Leasing Program

MEDICI

Have you heard of Invisible payments? Have you heard about the uber experience in payments? In more than 80% of the conferences and more than 90% of the news/media sites these terms make regular appearances. Now Uber is planning to make life easier for the drivers by launching its own leasing program and financial services industry has a reason to worry. Earlier this year, Uber entered into a partnership with Banco Santander’s US lending unit and announced the Uber Santander Lease Program. Uber's relationship with Santander was active since February. The website said, “Drivers could sign up for Uber and then lease a new car for as little as $17 per day. At end of term, you can own the car for $1.”

Last week, Uber announced that the deal with Banco Santander’s US lending unit is over and now it has launched its own auto leasing subsidiary in an effort to sign up more drivers, injecting the fast-growing ride services company directly into the financial services sector for the first time. Uber has named the program as Xchange Leasing. Uber has not disclosed how many drivers received financing from the Santander program. However, Uber announced that the new initiative by the company would offer both new and used cars.

Banco Santander’s US lending unit declined to comment on why the Uber leasing deal ended. Uber is continuing its partnership with other lenders for car purchases.

Earlier in 2013, Uber launched a program to arrange manufacturer discounts and lenders for prospective drivers who lacked cars in the hopes it would boost vehicles driving for the app-based service. The deal received widespread attention and Uber hoped to finance 100,000 drivers.

Andrew Chapin, head of vehicle solutions for Uber said, “Uber wants to provide drivers with more flexibility than traditional leasing companies can offer. Participants in Uber's program can return their vehicle within a two-week notice and "limited additional costs."

The arrival of Uber in financial services will become a cause of threat for the car financing market in the days to come, but at the same time the firm’s foray into auto leasing business brings the firm in contact with regulators in a controversial business.

Last month, the US Consumer Financial Protection Bureau said that it would oversee nonbank auto lenders who process at least 10,000 loans or leases per year. The CFPB also commented that it seeks to ensure that such leases are marketed accurately and that debt collectors operate fairly.

Santander has been criticized for its subprime auto loan business; this might be the major reason behind Uber’s decision to end the partnership.

Uber now operates in 57 countries and has a valuation of more than $40 billion. Earlier in May, the firm has struck a deal with peer-to-peer lender Zopa to offer its London-based drivers financing for new cars.

MEDICI Team

MEDICI

MEDICI Team is a group of content writers, bloggers, journalists, researchers, and editors from the MEDICI team who collaborate to create FinTech insights.

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