Uils wants to lend money to LatAm’s rideshare drivers based on their driving record • TechCrunch

When Yules launched in 2021, it was a car rental service for rideshare drivers. But after the founders realized that many rideshare drivers didn’t have access to credit, especially in Latin America, the Buenos Aires-based company turned to fintech and offered financial services to drivers with a behavioral score engine based entirely on a person’s driving history.

Rideshare vehicle leasing is a crowded market. Both Uber and Lyft host marketplaces where authorized vehicle rental companies display their wares. Uber has given drivers up to $500 for a short-term loan program to try out. DD, one of the largest ride-hailing companies in China, started offering loans to drivers in 2019.Like Giggle Finance they have long extended lines of credit for vehicle purchases, repairs and maintenance.

But founder and CEO Thomas Costanzo says Uils (pronounced “wheels”), one of 200 battleground tech startups, stands out for its ability to give drivers a “360-degree” view of the mobility gig economy. “By integrating with all the mobility applications in Latin America, we have an overview of the driver’s activity, we can determine the offer of credit that is more aligned with the reality,” he told TechCrunch in an interview.

To use Uils, drivers download the app, fill out the app, and connect the app to the ride-hailing platforms they drive through via an API (e.g. Uber). Uils analyzes their history using a machine learning model to determine whether they qualify for a “micro” or consumer loan, taking into account various factors.

The interest rate ranges from 0% for small loans ($1 to $2 for a weekly subscription) to 145% for consumer loans. That’s a huge range — and it sounds sky-high — but Costanzo says it reflects equally high inflation in Argentina, the country where Uil first started.

“The app has a bank account where drivers collect their earnings from mobility,” Costanzo explained. “They receive loan money in the same account and pay their installments every week. We have a collection process that runs every 15 seconds, so we collect the pending units before the driver remembers that the mobility app sent the money… They’re rent to own loans, so technically we can get the car as soon as the driver goes into delinquency, so there’s a 0% default rate.

Although services that track driver behavior to offer discounts and benefits have been around for a while, it’s a relatively new idea in the lending domain. For example, Zendrive collects data about driving habits and rewards drivers for making safer decisions. Root Insurance calculates car insurance premiums based on driving style, and Avenue rewards its customers for using autonomous safety features.

But there are clear surveillance — and bias — implications. Not every driver is likely to be comfortable with the idea of ​​sharing their driving history with Oils, especially since the company uses that information to help create their risk profile. And when algorithms are involved, there’s always the possibility that flaws in the model could cause some drivers to be treated unfairly or poorly. Sudden stops that force traffic around the driver to stop repeatedly are normally considered reckless.

There’s another risk to consider: the challenge of paying off loans in a down economy, especially when interest rates rise and inflation affects fuel prices. An April poll from Rideshare Guy, a ridesharing blog and forum, found that nearly half of rideshare employees have quit or started driving because of rising gas prices.

Yuils, meanwhile, said it requires customers to re-authorize connections between the app and ride-sharing platforms every month, so that tracking doesn’t continue indefinitely. (The organization will do (They require customers to verify their identity to receive a loan.) Uils is putting 70% of the algorithm details with the chest to show that 70% of users who apply for loans through the platform are accepted. The company isn’t saying exactly how many of those users failed to make payments, if any.

“The scoring engine has over 200 data points for each driver. We have variables like their work schedule, how many trips per day, how many apps they use, how many cars they use, and more,” Costanzo said. We will find. Under our current credit policy, that score tells us the maximum amount a driver can borrow.

After that Uils has the second layer based on earnings. Depending on the driver’s earnings, you can set aside up to 30% to pay off the loan.

But due to lack of transparency, Uil’s terms and approach can be less demanding than those of, say, Lyft or Uber — making it almost impossible to make a profit, some drivers say. A 2019 investigation found that drivers participating in Lyft’s Express Drive rental program paid less per mile than drivers using cars rented by dealers. The program also imposed restrictions on drivers and prevented them from earning money to use their vehicles for other purposes.

Costanzo emphasized that, again, these are drivers who don’t have traditional credit — making their financial situations particularly worrisome.

“Our biggest competitive advantage is that we implement a matching funding strategy around the amount paid,” Costanzo said. “Drivers pay the same amount as renting the car in the informal market, which offers a seamless solution. On top of that, we are the only fintech in Latin America that offers major consumer loans and rental loans without consulting credit bureaus or asking for a credit card or other collateral.”

Image Credits: Confessions

Uils is currently raising the second round of funding – a total of 1 million dollars – for a simple agreement on future equity (SAFE), which will give the investors the right to buy equity in the company in the future. Estimated post-money startup at $7.5 million; According to founder and CEO Thomas Costanzo, the new capital will be used for overall “growth and development,” including the expansion of UIL’s head office.

“We raised $275,000 in our pre-seed round and used the money to build our product – a mobile wallet and scoring engine – for 12 months,” he said. “Now, we’re expecting this round to help us achieve 24 months of additional runway to develop our scoring engine, develop new features, and expand in Latin America — specifically Mexico, Chile and Colombia.”

In the coming months, Yuils plans to launch an insurance cover and Buy Now, Pay Later (BNPL) solution – an angle to grab a bigger slice of the ridesharing Fintech market. If the course of the BNPL industry in the US is any indication, regulatory scrutiny may be forthcoming. But now Yule stands to benefit from a relative lack of direct competition.

“Providing a strong value proposition and mitigating risk through alternative data models will be a differentiator in a highly competitive market,” Costanzo said. “High-growth models have been replaced by retention… current conditions encourage efficiency over growth.”