LoanNow Targets Subprime Customers With Innovative Lending Contract

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LoanNow
is unveiling a new lending arm aimed at subprime customers at this week's
Finovate Conference
.

The company has made its name as a lender by offering fast loans through its website to people whose credit scores are undesirable to traditional banks.

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The company says it takes customers' financial responsibility into account by lowering the cost of its loans for borrowers who demonstrate positive habits. Now, the company is looking to help deep subprime customers whose FICO scores are between 500 and 650 by allowing them reduce their APR with multiple co-signing options.

Friends And Family Discount

LoanNow will allow potential customers to gather friends and family as micro-cosignatories. Each person can vouch for between $25 and $500 to lower the loan's interest rate.

The company said that a borrower will have the capacity to reduce their APR by 50 percent by securing $1,000 worth of vouchers from 10 or more people.

Related Link: Tight For Cash? Avoid Payday Loans With These 3 Alternatives

An Alternative To Payday Loans

The program creates a new option for people whose credit scores only allow them to take out an expensive payday loan and marks an interesting innovation in the lending space.

LoanNow says its algorithms use much more than just a customer's credit score to calculate the cost of a loan, rewarding those who've improved their spending habits recently.

The company is also planning to offer its deep subprime customers the option to meet financial goals, like making early payments or larger payments, the opportunity to lower the cost of their loan.

Image Credit: Public Domain
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Posted In: Top StoriesPersonal FinanceFinovate ConferenceLoanNow
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