Startup Online Lender Targets the Unbanked

A new online lender specializing in personal consumer loans has emerged.

NetCredit LLC says its propriety underwriting technology will make instant eligibility decisions on whether a consumer qualifies for a loan. Qualified customers will receive a customized loan offer ranging from $500 to $3,000 that can be repaid through installments over six to 36 months, said the company in an announcement issued today.

Though the rates and terms weren't detailed in the release, the company website offers examples of typical loan terms, which are high. For the state of Virginia, the company illustrated that a consumer from an excellent credit tier taking out a $2,900 loan might receive a 78.3% APR for 39 bi-weekly payments. Meanwhile, NetCredit illustrated it could charge an average credit tier consumer an APR of 242.3% for 17 bi-weekly payments on a $900 loan.

A spokesman for the company offered this explanation for these rates: "NetCredit offers credit options for those that generally don’t have access to banks and other traditional sources of credit. Our rates and loan terms are customized to each borrower and are typically lower than other sub-prime lenders. Due to the high cost of underwriting sub-prime loans, rates generally range from 65% to 300% and reflect the cost of originating loans, conducting numerous checks (AML checks, fraud prevention checks, bank verification checks), funding the loans, servicing customers and collecting on arrears. What’s important to realize is just how many Americans are facing this crisis, a shortage of cash to handle unexpected expenses." 

NetCredit says it does not charge any additional fees associated with the loan, such as an application or origination fees.

NetCredit is targeting its services to those individuals who can't qualify for a loan from a bank. To that end, the company says it looks at a credit score and a number of other variables in the applicant's broader financial picture when offering a consumer credit.

"There is a growing number of Americans in today's economy who are falling into the credit gap, unable to borrow from their bank and not adequately served by existing non-bank products in the marketplace," said Stephanie Klein, head of consumer lending at NetCredit, in a statement. "NetCredit is designed as a solution for the millions of Americans who are turned down by their banks, but need access to credit to pay for unexpected expenses such as, medical costs, car repairs or home improvements."

NetCredit personal loans are currently available in the states of Virginia, Missouri, Wisconsin, Utah, Idaho, Delaware, and South Dakota.

NetCredit said it will report repayment history to the major credit bureaus.