New research finds small dollar loans are up to 24x cheaper at Oportun, which uses AI to assess credit risk and score 100% of applicants
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SAN CARLOS, Calif., Nov. 2, 2021 /CSRwire/ — Today, Oportun (Nasdaq: OPRT), an AI-driven fintech that provides hard-working people with access to responsible and affordable loans, released the findings of the Analysis of the real cost of a loan, conducted by the Financial Health Network. This new report demonstrates that there is a need for low-cost, low-cost loans. One solution is the type of AI-powered underwriting offered by Oportun that could significantly reduce the cost of small dollar loans for hard-working people.
Among its findings, the study found that an online-only $500 installment loan can cost over $2,400 in interest and fees to someone with a poor or no credit history over the life of a loan. . By comparison, a responsibly structured loan underwritten using artificial intelligence (AI) and machine learning would only cost $102 in interest and fees, a savings of more than 24 times.
The analysis, conducted by the Financial Health Network and commissioned by Oportun, provides an independent look at the lifetime cost of the various small loan options most readily available to people with poor credit or no credit history. It is important to note that these comparisons are generally not available to consumers looking for loan options and affordability.
“The reality is that the people who need affordable credit the most often pay the most interest and fees,” said Matt Jenkins, chief operating officer and general manager of personal loans for Oportun. “This rigorous examination of realistic credit options for these households shows that loan structure and the use of advanced technology in underwriting matters. We hope these findings will inspire other vendors to adopt best practices in product design and AI to help maximize affordability and impact for hard-working people.
In a separate study, the 2021 FinHealth Spending Report found that low- and middle-income families spent $127 billion in interest and fees on alternatives that include the four products used in the analysis of the true cost of a loan: credit cards, installment loans, payday loans. , and lease-purchase. The True Cost of a Loan study used a proprietary model developed by the Financial Health Network to analyze pricing data and household incomes across all states to find out how much a typical Oportun customer would pay for loans of $500, $1,500 and $3,500.
Additional key findings include:
- Online-only installment and payday loans as well as traditional payday loans all resulted in interest and fees totaling more than $3,000 on a $1,500 loan, while credit cards and Oportun loans cost both under $500.
- A typical $3,500 payday loan is the most expensive with $10,775 in interest and fees, while an Oportun loan is the cheapest at $1,645.
- On average, Oportun loans were 6 times more affordable than other available loans of equal amounts.
“It can be difficult for consumers to gauge loan costs because credit products vary widely in their structures and fees,” said Marisa Walster, vice president of financial services solutions, Financial Health Network. “This rigorous analysis shows that responsible construction of loans combined with competitive interest rates can contribute to substantial savings for consumers.”
Oportun uses advanced data analytics, proprietary risk scoring, AI, and over 15 years of consumer insights to sustainably serve low- and middle-income consumers responsibly, affordably, and at scale. Uniquely, this technology allows Oportun to score 100% of loan applicants with a high degree of accuracy.
Oportun’s core product is an easy-to-understand, affordable, unsecured, fully amortized personal installment loan with fixed payments and fixed interest rates over the life of the loan. Oportun loans have no prepayment penalties or lump sum payments, are priced below 36% APR and range in size from $300 to $10,000 with terms from 12 to 48 months.
Since its inception, Oportun has successfully provided over 4.3 million loans and $10.5 billion in credit, mostly in the form of small dollar loans, saving its customers over $1.9 billion. dollars in interest and fees compared to other options generally available to people with little or no credit. the story. By reporting repayment performance to major credit bureaus, the company has also helped more than 925,000 people begin building a credit history.
Click here to download the report.
Oportun (Nasdaq: OPRT) is a financial services company that leverages its digital platform to provide responsible consumer credit to hard-working people. Using AI-powered models that draw on 15 years of proprietary customer insights and billions of unique data points, Oportun has granted over 4 million loans and over $10 billion in credit affordable, offering its customers alternatives to payday loans and auto titles. In recognition of its responsibly designed products that help consumers build their credit history, Oportun has been certified as a Community Development Financial Institution (CDFI) since 2009.
Oportun (Nasdaq: OPRT) is a financial services company that leverages its digital platform to provide responsible consumer credit to hard-working people. Using AI-powered models that are backed by 15 years of proprietary customer insights and billions of unique data points, Oportun has granted over 4 million loans and over $10 billion in affordable credit, offering its customers alternatives to payday loans and auto titles. In recognition of its responsibly designed products that help consumers build their credit history, Oportun has been certified as a Community Development Financial Institution (CDFI) since 2009.