Our Lendbuzz CEO and co-founder Amitay Kalmar recently sat down to speak on Bloomberg’s Baystate Business Hour talk show. Amitay spoke with Bloomberg about Lendbuzz’s origin and how we’re helping internationals get the cars they need in the US. You can listen to the full Lendbuzz Bloomberg interview and see the redacted transcript below.
Peter Barns, Bloomberg Baystate Business Hour: Fintech is big in Boston. Here’s a company doing it: Lendbuzz. It offers car loans online mainly for foreign nationals in the US with what they call “thin credit.” And it’s not what you think. Lendbuzz just landed another $30 million in venture funding. Bringing total funds raised to $45 million. Joining us now with more on the company is co-founder and CEO Amitay Kalmar. And, Amitay, start first with telling us what “thing credit” is.
Amitay Kalmar, Lendbuzz CEO: So thin credit basically means that the person doesn’t have a credit file in the US. Or his credit file is not well developed or not deep enough for traditional banks to evaluate.
PB: And that’s probably the case with a lot of foreign nationals who come here to work. They might have their banking back home in their home country. And so you saw a market for helping them get car loans.
AK: Correct. These individuals are people that are well educated. They have great employment history back home, great earning potential in the US. But they come here and they do not have a credit file here in the US. Therefore their access to credit here is very challenging. So we focus on alternative data to evaluate their creditworthiness. So we can provide them with financing and basically get them a nice new car.
PB: Give us some more details on that, Amitay. You gather more information on these people and then you put together what amounts to a new credit history so you can then feel safe about lending them money?
AK: Correct. So instead of evaluating their credit history in the US, which is what most traditional banks do, we evaluate alternative data like their: educational background back home, their employment history back home, their financial profile both in their origin country and the US, their social profile. So we can evaluate their creditworthiness and therefore extend them credit.
PB: So that sounds like more work. That sounds like you’re going to have to charge them more for the insurance.
AK: What we try to do is be very competitive with traditional banks. Obviously, we’re going to be a bit more expensive. But it’s not going to be significantly more expensive. Our rates start at 4.9 and go up from there. It is more expensive that getting a car loan from Bank of America, for example, but not much more than that.
PB: We’re talking to Amitay Kalmar, co-founder and CEO of Lendbuzz. Which is doing online car loans for foreign nationals with what they call “thin credit” which means not much of a credit history here. So tell us about business. How many loans have you made? How many customers do you have?
AK: We funded over $25 million so far. And it’s been growing.
PB: Since 2015?
AK: We actually started extending loans on the end of 2016. So we co-founded the company end of 2015. It required a lot of development effort before we started originating loans. Most of the algorithms were built in the first year. And we keep improving and iterating on the models, actually every week. Every week we release a new set of algorithms for improving our existing algorithms. Growth has been great. We started here in Massachusetts, in the Boston area where the company is based. And both myself and Dan, my co-founder, are based. And now we’re extending to other states including California, Flori da, New York, New Jersey.
PB: Do you have competition?
AK: We don’t have much competition. Our competition is either subprime lenders who don’t take into account credit history as the major factor for underwriting but their rates are extremely high. And then a lot of people buy with cash today. Cash is always a competition to financing. But not a lot of companies do what we do.
PB: And just to clarify, you’re doing the marketing and customer acquisition piece of this, then you work with banks to provide the loans?
AK: So banks basically back us. We get the credit lines. We’re still the direct lenders. We actually still own the risk.
PB: What’s your loss ratio? If you’re using this to find people with good credit, is your loss ratio better or worse than commercial banks? Are you a bank?
AK: We’re not a bank. We’re not a depository institution. We’re an alternative lender. You see more and more of these online lenders like us, the very large ones like SoFi that focus on student loans but both them and US are not banks. We’re online lenders or alternative lenders.
PB: And your losses?
AK: Our losses are extremely low. They’re comparable to people with FICO of 750+. So that would be very good credit.
PB: Co-founder and CEO of Lendbuzz Amitay Kalmar. Thanks for coming in. Fascinating story.
We want to thank the Bloomberg Baystate Business Hour for having our CEO over for an interview.
Are you new to the US? Need a car loan? Lendbuzz can help you purchase the car you need. We offer competitive rates for international students, professionals, and expats. No credit score, social security number or co-signer needed. We help you through every step of the way. From applying from your home country to picking the right car for you. Apply online in minutes and get your rates today.