Here's How Boris Bike Sponsors- Santander and Uber Have Partnered to
Get More Drivers on the Road
Massachusetts Attorney General Martha Coakley is investigating Santander, the Spanish bank with US headquarters in Boston, for suspicious auto lending practices, which appear similar to, but on a less catastrophic scale, the subprime mortgage scam that led up to the collapse of the U.S. housing market in 2008. Santander Consumer USA (SCUSA), the bank's branch specializing in car loans, has been in partnership with Uber and offering low payments to potential car buyers who would like to drive on the Uber platform.
Coakley has subpoenaed the records of Santander Consumer USA for its borrowers credit scores, the interests rates they were charged, and how the loans were pitched to investors, Brad Puffer, a spokesperson for the AG told the Boston Globe, which added in its report that "Coakley took a similar approach in investigations of subprime mortgage lending a few years ago."
Santander isn't the only bank being questioned, Puffer told the Globe. Coakley has questioned a number of other auto lenders across the state. The investigation in Massachusetts coincides with similar investigations by other state attorneys general across the country.
As is usually the case with Uber, any involvement the widely popular and controversial ridesharing company may have in Santander lending loans to unlikely-to-pay borrowers would appear to be indirect. However, neither Santander nor Uber has been shy about offering low rates to prospective drivers looking to get on the road.
On its website, Uber states that one can apply for customized car financing options in order to drive for Uber. Deals would be arranged through Uber and its partner, Santander Consumer USA.
Here are the details Uber shares about the program:
It's available only for Uber partner drivers, who must pass a "City Knowledge Exam" at the Uber office.
Drivers are asked to fill out a consent form, authorizing Uber to share data with SCUSA – and only SCUSA.
Drivers are allowed to choose an eligible uberX, UberBLACK or UberSUV vehicle and set up an appointment with a "corresponding SCUSA Uber Select Dealer."
After selecting a whip and setting up an appointment, drivers must bring their down payment to the SCUSA dealer, who will "walk you through the application process." Insurance is also required.
Once a driver has signed a contract, he or she will be asked to provide proof of insurance to the dealer. If all checks out, then it's time to drive.
Uber's pitch: This lease-to-own financing is "Affordable, easy to qualify and simple." Partner drivers, Uber claims, can receive payment offers as low a $17 per day. Drivers can drive the miles they need in order to "earn what you want." And, at the end of the lease term, drivers who have provided a deposit can "own the car for $1."
Here's a sample of eligible Uber vehicles.
Uber has been trying aggressively to add drivers on its network, using low-rate auto financing as its hook, for more than a year. In November, 2013 blog post, Uber CEO Travis Kalanick, in light of widespread expansion into new markets, announced, "in true Uber fashion, we're finding innovative ways to power billions of dollars in car purchases."
The goal of the pilot program – which was launched in Boston, San Francisco, Dallas, Chicago, New York and Philadelphia – was for Uber, in partnership with carmakers General Motors and Toyota, as well as "leading financial institutions," to lower operating costs for drivers and get more cars on the road.
The key to this new platform? Uber partner-drivers have a robust, reliable cash flow through the Uber platform – every fully utilized car on the Uber system grosses over $100,000/year. That kind of cash flow lowers the risk of financing drivers and means better access to cheaper credit than otherwise available on the open market.
The business model seems simple and, at least in theory, rather brilliant: add jobs by giving people a way to finance their own business – their cars they plan to drive for Uber – for cheap. Lenders' risk would be minimized because they wouldn't just be lending borrowers money for a car; they would be kickstarting a proven money-making business.
But, since November, 2013, Uber rate cut after rate cut has been eating away at drivers' fares. In order to make the $50,000 or more a year Uber has said can be made, drivers have been forced to drive longer hours and more miles.
"Yes! Im trying to turn in my car right now now. Im stupid and I didn't read the contract. The interest was in there even though Uber said there woulnt be any interest. I know for next time...that there is no such thing as "no interest" when leasing. (again...Im stupid)
Uber said my chrysler 300 would be UberBlack one day in LA. Then after we get the car, we find out my car will NEVER be UberBlack in LA.
They lied about the gas milage too. 20mpg. NOT 31MPG!!!
They lied about "no penalties" for canceling the lease. Lies and more lies. Now I gotta pay $2,100+ just to give the car back.....but first santander has to get off their asses and "OK" it to the car dealer before I can turn in, otherwise its a liability for the dealer.
I feel like a shmuck.
Oh yeah! ...and also I quit working because of these shitty new rates.....so yeah. Im done with driving...at least with this crappy lease and way too expensive car.
I wish someone else would come forward and admit they got suckered too so I don't feel as bad."
I feel sorry that you gotten taken advantage so badly. The promoters of the Santander deal should be criminally prosecuted for fraud. Yes, lying in that way constitutes fraud. And LYING is a core corporate value of Uber, it is the fundamental premise on which the business has been built.
Other commenters provided mixed reviews about Uber-Santander car financing. "I am on the Santander program and have not noticed much of a difference in being able to make it out here," one commenter wrote.
"I almost took the Santander deal," wrote another, adding: "Very glad i did not, to really make a dollar you have to hustle, not to mention be all over town. Trust me I will find a way for Uber to work for me, on my terms... I see the company is not looking our for their 'partners.'"
Santander Consumer USA, Uber's partner, has received the most complaints for auto lenders in the US Consumer Financial Protection Bureau’s database, according to the Globe report. Through September of this year, the company has repossessed 166,000 cars, which is about 12 percent of the total amount – 1.4 million – cars repossessed by US lenders in all of 2013.
Editorial Comment :
This story was buried over the Christmas Holidays and would have slipped by unnoticed, if it hadn't been spotted by our ace researcher J.