On the Road Lending is working on ways to scale its character-based lending model — to potentially include auto insurance — and expand its program geographically, following the three grants it received from Toyota Motor Co. earlier this month, Mobility Finance has learned.
On the Road Lending (OTRL) is a non-profit founded in Texas in 2013, and works with clients in financial coaching specifically related to acquiring a vehicle. It has a separate lending arm that provides small loans for low-to-moderate-income people. Currently, OTRL works with 10 dealers and plans to expand geographically, assist 1,000 people with loans over the next two years, and find ways to additionally scale character-based lending through technology, Michelle Corson, the organization’s founder and chief executive, told Mobility Finance.
“We’ve had people from various cities contact us, including Detroit and New Orleans, Denver, San Diego, Cincinnati, Seattle … We also have a partner in 16 cities across the country that wants to partner with us in all cities,” Corson said, adding that the partner is YearUp, and On the Road Lending is in discussions to create pilot programs in Boston and Atlanta.
Additionally, the non-profit is exploring the possibility of vertically integrating auto insurance into its model, Corson said. Although the company is unsure if this is a route it wants to take, she added. OTRL is also looking at ways to offer electric vehicles to clients, and the roles its model can play into other mobility services.
“I think the idea of using our model for other platforms could work in some creative ways,” she said. “Perhaps we [could] make a loan to someone and incentivize carpooling alongside it, for example,” Corson said.
Character-based lending from OTRL offers an eight-step including phone interviews, financial coaching through workshops, and going over credit history, Corson said. Clients in the program often work with OTRL for several months before securing a loan from its lending arm, and OTRL keeps in touch with the client throughout the duration of the loan. Because of this, it can be difficult to scale a program that requires a lot of time and energy from advisors and clients alike, Corson said.
To that end, Toyota and On the Road are working together to find ways to automate and streamline the process. “We are taking the approach that lenders had back in the ’40s and ’50s before credit cards were popular and a bank could pull up a credit report — when a banker knew the person getting the loan,” Corson said. “We are looking at behavioral science, developing tools, and algorithms to rank how forward-thinking or responsive someone is [for example].”
In addition to creating algorithms, the organization is also looking at quickening the pace of assisting clients by finding ways to digitize information and make it easier for clients to send information to the non-profit. “There’s a lot of emails sent back and forth right now,” Corson said.2 - Readers Like This Post