Uber Technologies Inc is launching a program that helps those without a car or the financial means to get one to drive for the ride-hailing giant.
Since January, Uber has partnered in California with flexible car-leasing start-up Fair to supply vehicles to drivers for a US$185 refundable security deposit.
Drivers can then earn that much in credits from Uber if they complete 70 trips a week, which can effectively offset payments owed to Fair.
“Uber wants to really find a way to lower the barrier or the hurdle to getting into a car,” Fair founder and chief executive officer Scott Painter said in a telephone interview about the program, which is expanding to 10 major markets across the US.
“This is designed specifically to attract drivers who may not even have enough credit to get a traditional car loan of any kind,” Painter said.
Uber in January last year agreed to sell its subprime-lending unit to Fair, which gave the start-up access to a pool of drivers that now make up roughly half of the company’s more than 30,000 active users.
Initially conceived as a way to help new drivers get started, Uber’s unit formerly known as Xchange Leasing racked up losses and drew criticism for saddling drivers with financial commitments that they struggled to meet.
Painter said that Fair’s model would be less risky, because the company is more flexible about allowing drivers to return a car when they want and is not requiring them to make a significant financial commitment over a years-long lease.
Fair also maintains a digital link to a user’s bank account or credit card. While the company runs a credit check off an applicant’s driver’s license, there is no traditional financing process needed, because Fair maintains ownership of the vehicle.
Ahead of Uber’s US$8.1 billion initial public offering (IPO) this month, drivers staged protests and strikes in major cities across the US and UK over low wages and unstable working conditions.
The company warned in its IPO prospectus that driver dissatisfaction could increase as it tries to reduce incentives and improve financial performance.
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