SAN CARLOS, Calif., Nov. 01, 2021 (GLOBE NEWSWIRE) – Today, Oportun (Nasdaq: OPRT), an AI-powered fintech that provides hard-working people access to responsible and affordable credit, released the results of its True Cost of a credit analysis conducted by the Financial Health Network. This new report shows the need for lower-cost US dollar small loans. One solution is the type of AI-powered underwriting offered by Oportun, which could dramatically reduce the cost of small loans for hard-working people.
The study’s conclusions include that an online installment loan of $ 500 could cost someone with poor or no credit worth more than $ 2,400 in interest and fees over the life of a loan. In comparison, a responsibly structured loan taken out using artificial intelligence (AI) and machine learning would cost only $ 102 in interest and fees, a savings of more than 24x.
The analysis, conducted by the Financial Health Network and commissioned by Oportun, provides an independent look at the lifetime cost of the various small dollar loan options that are most easily available to people with poor credit or no credit history. Importantly, these comparisons are typically not available to consumers looking for credit options and affordability.
“The reality is that the people in need of affordable credit most often pay the highest rates and fees,” said Matt Jenkins, COO and general manager of personal loans at Oportun. “This rigorous examination of realistic credit options for these households shows that credit structure and the use of advanced technology in underwriting are important. We hope these results inspire other vendors to adopt product design and AI best practices to maximize affordability and impact for hardworking individuals. “
In a separate study, the FinHealth Spend Report 2021 found that low- and middle-income families are spending $ 127 billion in interest and fees on alternatives that include the four products used in the True Cost of a Loan analysis: Credit cards, installment loans, payday, and rent. The True Cost of a Loan study used a proprietary model developed by the Financial Health Network to analyze state price data and household incomes to determine how much a typical Oportun customer would pay for $ 500, $ 1,500, and $ 3,500 loans would pay.
Other important findings are:
Online-only installment and payday loans, as well as traditional payday loans, have all interest and fees totaling more than $ 3,000 on a $ 1,500 loan, while credit cards and oportun loans are both less than $ 500. A typical $ 3,500 payday loan is the most expensive in interest and fees at $ 10,775, while an Oportun loan is the cheapest at $ 1,645. On average, Oportun loans were six times cheaper than alternative loans of the same amount.
“Consumers can find it difficult to estimate the cost of credit because credit products vary widely in structure and fees,” said Marisa Walster, VP of Financial Services Solutions, Financial Health Network. “This rigorous analysis shows that responsible credit management combined with competitive interest rates can deliver significant savings for consumers.”
Oportun leverages advanced data analytics, proprietary risk assessment, AI, and 15+ years of consumer experience to serve low and middle income consumers responsibly, affordably, and on a large scale. Unique, this technology enables Oportun to rate 100% of loan applicants with a high level of accuracy.
Oportun’s core product is an easy-to-understand, affordable, unsecured, fully amortizing personal installment loan with fixed rates and fixed rates throughout the life of the loan. Oportun loans have no prepayment penalties or balloon payments, are priced less than 36% APR, and range from $ 300 to $ 10,000 with terms of 12 to 48 months.
Since its inception, Oportun has successfully extended more than 4.3 million loans and $ 10.5 billion in loans, mostly in the form of small loans, saving its customers more than $ 1.9 billion in interest and fees compared to other options that are normally available to people with little or no credit. By reporting repayment performance to the major credit bureaus, the company has also helped more than 925,000 people compile a credit history.
Click here to download the report.
About Oportun Oportun (Nasdaq: OPRT) is a financial services company using its digital platform to provide responsible consumer credit to hardworking people. Using AI-powered models based on 15 years of proprietary customer insights and billions of unique data points, Oportun has extended more than 4 million loans and over $ 10 billion in affordable credit, offering its customers alternatives to payday and auto title loans. Recognizing its responsibly designed products that help consumers build their creditworthiness, Oportun has been certified as a Community Development Financial Institution (CDFI) since 2009.
Media contact George Gonzalez 650-769-0441 [email protected]
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