Finova is a Florida-based online lending company that can provide consumers with an almost instantaneous vehicle equity line of credit (VELOC) 24hrs a day, 7 days a week. They have innovated the title lending industry by breaking away from the traditional brick and mortar model and creating an online/mobile system that can assess a client’s creditworthiness and approve loans up to $5000 within 10 minutes. Finova uses a transparent fee structure that allows consumers to repay their loan over a minimum 12-month period and offers interest rates that are 50% lower than the national average.
Tapping into a $5.3bil (and Growing) Industry
CEO and co-founder Gregory Keough describes the traditional $5.3bil US Title Lending industry as “broken and in desperate need of disruption.” When asked about his reasoning behind founding Finova, Keough recounted a personal experience from two years ago, when one of his employees needed cash right away and went to get a title loan from a brick and mortar location. The employee ended up making 8 interest only payments before even touching principal balance. The interest was 300%. Keough recognized a consumer-saturated industry that was in serious need of an overhaul.
In a technology-rich era, people are looking for instantaneous results. In a recent press release on prweb.com, Keough commented, “consumers clearly prefer an online more automated approach that allows for much lower costs than the traditional industry.” Nobody would understand this better than Keough, who has successfully navigated though the fintech world for the past 25 years, most recently as the CEO Mobile Financial Service (a Brazilian joint venture between Mastercard and Telefonica).
Finova optimizes the title lending process through their online platform, allowing consumers to apply, get approval, and obtain their loan from home via computer or mobile device, 24hrs a day and 7 days a week. This makes VELOC accessible to a greater number of consumers each day.
Breaking the never-ending debt cycle
According to the FDIC, 28% of US households are living outside the formal financial system. These 70mil Americans are Finova’s targeted consumers. A majority of Finova’s clients are underserved by traditional banks and have turned to alternative lending institutions. The industry is inundated with predatory companies that lock borrowers into never-ending debt cycle with interest rates between 300-400%.
Finova’s goal is to break the cycle. Not only do they allow more time to pay back the loan (12 months versus the typical 30 days), but also a partial amount of every payment made goes toward the principle, so it is easier for clients to pay back the loan timely manner. Finova has also created a reward system for their consumers that allows borrowers to earn “Finova Points” for every on time payment. Borrowers can use their Finova Points to skip payments with no penalty.
Finova offers another reward for loan payments as well; they help consumers with bad or no credit establish or rebuild credit by reporting positively to credit bureaus. As the client makes payments and gains better creditworthiness, Finova offers better interest rates. Finova calls this a process of the “Finova Score,” their in-house “proprietary constantly learning credit scoring system.”
A VELOC in 10 minutes
There are four main pieces of criteria a consumer needs in order to receive a title loan from Finova: 1) He must own a lien-free car title. 2) He must be at least 18 years old with a driver’s license. 3) He must have proof of income. 4) He must have proof of residency. If the consumer meets those requirements then he can simply fill out an application online and with the use of the Finova Score system to determine your creditworthiness, you can be approved for a loan of up to $5000 (depending on worth of vehicle and the borrowers ability to repay the loan) within 10 minutes.
Once a client is approved and takes out a title loan from Finova, the title is held as collateral until the loan is repaid in full. (They are currently connected with 16 DMV’s to verify vehicle titles online). The consumer is given a code via SMS, which they can take to any Moneygram or Walmart in the nation to receive the cash. They can also make payments at those locations as well, even if they do not have a bank account. The goal is faster and easier loans, which are then paid off faster and easier for the consumer.
$500k in Just 2 Florida Cities with a Backlog of 10,000 New Clients
Since their launch in October 2015, Finova has seen a tremendous demand for their product. They are currently only operating in two Florida cities, and have already done around $500k. Keough reports that they have a backlog of 10,000 clients who want loans but cannot be accommodated at the moment. Finova’s biggest limitation at the moment is lending capital, but a recent signing on of a debt facility for $50mil is helping solve that problem.
Keough believes they have “created a new financial product,” and this product really seems to sell itself. While Finova does some traditional advertising with direct mailing and such, for the most part they gain new clients though referrals. “Clients really like us,” says Keough. Thanks to Finova’s innovative lending platform, consumers are leaving happy, and in return bringing in more business. With their latest $50mil lending capital gain, business should be booming.
500 Startups’ Investment puts Finova on the Map
Finova continues to gain support in the industry with the announcement of a round of funding from 500 Startups. While Finova is currently only doing business in Florida, they hope to spread their business across the US. Second co-founder, Derek Acree believes, “As a top tier Silicon Valley venture capital firm [500 Startups will] make for an ideal partner” as Finova continues to grow. With their product in such high demand, it is only logical that Finova will continue to be successful and profitable as they move forward.