Lending Club has announced that it plans to enter the auto refinancing field as it attempts to regroup following the forced resignation of its founder and CEO Renaud Laplanche in May. Lending Club will begin refinancing car loans for California consumers with FICO scores above 640, and whose cars are less than 7 years old and have been driven fewer than 80,000 miles. New CEO Scott Sanborn says that interest rates for California customers will range from 2.49 percent to 19.99 percent, and that the average borrower could save $1,350 over the life of their loan.
Though automotive lending is a massive market, car refinance is smaller owing to a lack of awareness, suggests Lending Club CEO Scott Sanborn, with whom we spoke by phone earlier today. “People know they can refinance their home. But after their home, their car is their second-largest purchase, yet the car refinance market in the U.S. was about $40 billion last year.” In comparison, the overall U.S. auto loan debt market had grown to $1.103 trillion by this June, according to the research firm Experian Automotive. For Lending Club, it’s a prime opportunity (no pun intended), though it carries plenty of risk, as well. The publicly traded, San Francisco-based company struggled throughout 2016, following the forced resignation of its founder and CEO Renaud Laplanche in May over alleged conflicts of interest and a mishandled sale of loans to Jefferies Group.