UPGRADE, the online consumer finance start-up founded by former LendingClub boss Renaud Laplanche, is set to launch a personal credit product.
Personal Credit Line is a hybrid of a personal loan and credit card that will offer US consumers up to $50,000 (£35,300) in credit. The online product will allow borrowers to draw from a line of credit and pay interest only on the actual amount borrowed.
The credit line will be available for a fixed length of between one and five years and borrowers must pay off part of the loan every month.
“At Upgrade, we’re focused on building the next generation of credit products that will help our customers maintain or improve their good credit standing and give them affordable credit so they can build a bright future,” said Laplanche.
“We designed the Personal Credit Line to give consumers the two things they want most: the flexibility to access funds when they need them, and the predictability of a fixed rate and equal monthly payments.”
The product is a direct challenge to the US credit card market and Upgrade will offer interest rates on average five per cent cheaper than its competitors.
Laplanche had to step down as chief executive of US peer-to-peer lending giant LendingClub in May 2016 after the company’s internal probe uncovered loan irregularities and corporate governance issues.
The scandal caused the company’s share price to plummet and triggered investigations by both the US Securities and Exchange Commission and the Department of Justice.
He returned to the P2P market last April with Upgrade and raised $60m (£48.3m) in equity and convertible notes from a large group of investors including Union Square Ventures, Ribbit Capital, Vy Capital and Silicon Valley Bank.
Laplanche revealed that his new firm is now initiating $100m in personal loans a month and has annual revenue of $60m.
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