Is Uber Encouraging Drivers To Take Out Subprime Loans?

Reports have begun circulating from various news sources alleging that Uber is encouraging its drivers to take out high-risk subprime loans. An article released November 4th by ValleyWag indicates that Uber drivers (called “partners”) are emailed suggestions for new auto loans. Those loans are part of the Uber Financing Program. Uber doesn’t provide auto loans; rather they suggest loans on behalf of their partners such as GM and Toyota. One of the main issues that the recent publication has with Uber’s involvement in auto financing is that two of its partners are being investigated by the Justice Department for subprime auto lending.

Both Santander Consumer USA and GM Financial are under investigation for subprime loan practices. Both organizations are also partners with Uber. This means that Uber suggests their drivers examine loan options through either of those two organizations. The concept of providing lending options to your drivers isn’t the issue that has grabbed national attention. The concern is that Uber is being overly optimistic in the earning projections for their drivers. This means the drivers think that they will make a certain amount of money and thus have that amount available to pay off a car loan. Uber even offers to take the money for certain auto financing out of their drivers’ Uber earnings. The Uber financing program also offers the opportunity to receive discounted lease offers. Travis Kalanick, CEO of Uber, has said those drivers who use the Uber Financing program can gross $100,000 per year in earnings. Confusion has surfaced as to how exactly Kalanick arrived at that figure. “The risk of financing these guys goes way down when they’re affiliated with us because they get in that car and they go to work everyday and they’re grossing $100,000/year on that vehicle.” Investigative reporting on the part of ValleyWag indicates that the work week necessary to gross $100,00o is likely much more than 40 hours per week.

Will Uber eventually partner with local dealerships and offer promotional lease deals to Uber drivers? Would your store want to get involved with more subprime loans? The Uber financing offers target consumers with poor credit. What do you think of that specific marketing method?