A livery driver for a fleet owner in Boston was looking for a way to obtain his own car and drive for Uber, the popular ride-sharing service. He heard about a vehicle financing program Uber was promoting to drivers who, like him, had a poor credit history. Roger, who asked to use only his first name for business reasons, signed a lease in September with an Uber-referred lender for a brand new Chrysler minivan.
Now less than a year later, Roger says he is on the brink of bankruptcy while facing weekly payments of $450 for his car lease plus late fees.
Uber, with a head-spinning valuation of $50 billion, has become a dominant force in the passenger transportation industry in large part by luring more drivers to its platform than anyone else. In an effort to maintain that edge and expand its pool of self-employed drivers beyond those who already own a car, the company has been steering potential drivers with bad credit to subprime lenders whose leases lock borrowers into years of weekly payments at sky-high interest rates.
On its website and in promotional emails to current drivers, Uber promotes its vehicle solutions program with pitches right out of the subprime lending playbook. “Credit challenges? No problem. Get on the road in 2 days with $0 down,” reads Uber’s driver signup page.
One of Uber’s first subprime leasing partners was Santander Consumer USA, a subsidiary of the Spanish banking giant. The lender drew the attention of federal authorities in 2014 when the Department of Justice issued subpoenas to the company as part of an investigation into the subprime auto loan market. In February Santander agreed to pay $9.35 million in a settlement with the Justice Department for illegally repossessing more than 1,000 vehicles from active military personnel. To read more of the story >