Ride-sharing leader Uber found itself the subject of some negative press last November after reports surfaced that the company was offering subprime auto loans to its drivers, many of whom don’t have good credit and may not make enough to cover payments.
The drivers signing up for these loans may not have their own vehicle, or they may not have one that meets Uber’s standards.
Uber offers to connect these drivers to lenders including General Motors and Santander Consumer USA. The loans are paid off through deductions from their Uber paychecks.
Recently, there’s been a new wave of media reports about how some Uber drivers are struggling to keep up with the hefty payments on these high-interest auto loans.
Richard Brunelle, a San Leandro, Calif. has been quoted in media reports. His 48-month loan is costing him $1,000 a month. It carries a 22.75 percent interest rate. Brunelle says he got into the loan by opting for the vehicle financing program Uber created for drivers with poor or nonexistent credit.
The ride-service company connects drivers with car dealerships and a variety of lenders, some of which specialize in subprime auto loans, including Santander Consumer USA.
Brunelle, 58, started driving for Uber last August. He saw the opportunity as a good retirement job after working in the Navy, in a prison, in construction and as a truck driver. But, like many Uber drivers signing up for financing, Brunelle didn’t have a car – only a motorcycle – and he says he had little credit because he’s mostly avoided credit cards.
Uber responds to these reports by saying that thousands of drivers have used the program without issues. Uber provided a driver for an interview with Marketplace.org. Jon Hutcherson told Marketplace that he’s happy with the loan because it involved “no hassle financing.”
Hutcheron says working with Uber made for an easier process than going to a dealer without the company’s backing because his credit is not good. Uber spokesperson Kristin Carvell says that’s the primary reason for the program, helping folks like Hutchinson to finance an automobile for the chance to make an income through Uber.
But these borrowers still have to make the payments, even if they stop driving for Uber for periods of time. Hutcheron said he had to take from his savings when he stopped driving after two accidents. “When you aren’t working for Uber, you make payments out of your own pocket like you do for a traditional loan,” he said.