“We plan to do $100 million of auto refi’s by the end of the year, it’s still TBD for 2017, but we certainly have aggressive plans,” Hughes said. “80% of our applicants for personal loans have an existing auto loan and as part of that process we can not only provide them with a personal loan, but also re-fi their auto – that’s a win-win if we can lower that monthly payment for the customer.”
The Chicago-based marketplace lender announced the expansion of their product offerings, starting with auto loan refinancing, in late March. The company, which extended its first loan in December 2013, previously offered only unsecured personal loans, to the “middle class,” Hughes said.
To be specific, Avant defines the middle class as consumers with Fico scores of anywhere from 580 to 700 – a consumer base that was largely underserved by the industry, according to Hughes.
“Other marketplace lenders, like Lending Club, Prosper – they all have average Ficos of 715, and you have plenty of lenders who are subprime, that are serving 550 and below,” he said. “But no one was really helping that 600 to 700 Fico Score customer. It’s a massive population of customers, so the four of us saw that opportunity.”
More than $3 billion in personal loans have been originated through the Avant platform in 3.5 years, and has grown from a company of 4 founders to 950 employees in Chicago, Los Angeles, and London today.
“Our goal is now to transition from a personal loan company helping this middle class consumer, to a multi-product lending platform,” Hughes said. “And our first launch was the auto re-finance product two weeks ago.”
Avant had 1.5 million applications for personal loans last quarter, the majority of which were from consumers with existing auto loans, which provides a “massive opportunity” for the company to cross-sell, according to Hughes.
“Obviously, we knew that auto was a big space, and we also think that auto has a lot of problems if you look in terms of experience,” he said. “We saw an opportunity — not to beat a dead horse — but to provide a better experience and product for the customer, especially when we saw so many people coming to us already with an auto loan. It’s a great way for us to dip our toe into the market.”
The company plans to launch a credit card product in August, and would like to transition into direct to consumer new and used car loans in the future as well. The timing, however, is still “TBD,” Hughes said.