- Uber is teaming up with fintech startup Caribou to help top drivers refinance their car loans.
- Goldman Sachs led Caribou’s $ 50 million fundraising round in January.
- Caribou executives say their offer saves Uber drivers an average of $ 100 per month.
For many Uber drivers during the pandemic, the decision to keep working comes down to a simple calculation of whether their earnings exceed costs. Beyond health risks, items like auto loan repayments, gasoline and maintenance dramatically reduce income and are a major source of driver turnover.
Uber is addressing at least one of these challenges through a new partnership with fintech company Caribou. The startup is integrating its service into Uber’s driver application, to help the best Californian drivers refinance their car loans.
Caribou executives say their offer saves drivers an average of $ 100 per month. As part of the Uber integration, it will also reduce origination fees by $ 50. Caribou does not offer the loans itself, but rather acts as a broker with other lenders such as credit unions and community banks.
CEO Kevin Bennett says most drivers finance through dealerships that charge considerably higher rates. Many people don’t even know they can refinance their auto loans. And for gig economy workers in particular, who sometimes struggle to earn enough on platforms to be worth it, those kinds of savings are significant, he said.
“By working with Uber and our lending partners, we hope to fundamentally transform the way the odd-job economy accesses finance,” Bennett added.
Caribou is a company steeped in Uber DNA. COO Eric Stradley previously worked on driver operations at Uber. The company also counts Rachel Holt, a longtime Uber executive and now venture capitalist, among its seed investors. It’s even headquartered in Uber’s former DC office. Caribou is also backed by Goldman Sachs, which led the startup’s $ 50 million funding round in May.
Goldman has also played an interesting role in Uber’s auto loan story. Six years ago, the company, then headed by CEO Travis Kalanick, started an ill-fated auto loan program for drivers with sub-prime credit scores. He was supported by a Goldman’s $ 1 billion investment. The program has been plagued by problems, including skyrocketing default rates. It was dropped in 2018, several months after current Uber CEO Dara Khosrowshahi took over.
The new program with Caribou is less ambitious and requires little investment from Uber. A spokesperson for the company noted that “For many drivers, a car loan is one of the biggest expenses to run a car and make money with Uber. We are always looking for ways to increase the cost. ‘accessibility and flexibility’.
Caribou is looking to expand its program to the United States. The startup has also started piloting a new service that helps car owners find cheaper auto insurance.