The news: Varo will make several updates to its small-dollar loan offering, Varo Advance, that range from changing the fees charged to revamped underwriting for borrowers. The US neobank, which announced the changes in an email for customers, said that they would kick in on October 1, 2021.
More on this: The existing fee structure for borrowers is $3.00 for a $50.00 advance, $4.00 for a $75.00 advance, and $5.00 for a $100.00 advance.
Under the new fee system:
Varo Advance users who don’t repay their loans still won’t take hits to their credit and are just locked out of borrowing further, per Banking Dive.
Varo also announced that it will incorporate its borrowers’ linked bank accounts into its underwriting process for the loans. The addition will let Varo examine outside data such as direct deposit records and transaction histories.
These are substantial changes for a product that was only announced in October 2020.
The opportunity: The revamps to Varo Advance give the neobank two key shots at supporting its lending operations:
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