When Jordan Miller started Yendo, a fintech startup providing vehicle-secured credit cards, he wanted to dive headfirst into a challenge.
“People want to work on payments, or things for ultra-high-net-worth individuals,” Miller told me over Zoom. “But access to cheap credit, in a way that gives people tools to finance their daily lives without pressuring them…It’s a really dirty problem, a middle America problem. To be completely honest, a lot of predatory lending is illegal in California and New York, where most fintech innovation comes from. No one has really solved this.”
Yendo, based in Dallas, has now raised $150 million in debt financing, led by i80 Group, and $15 million million in equity, Fortune can exclusively report. The startup is growing, with a long waitlist and plans to expand across all 50 states.
Yendo’s idea is essentially this: Car-secured loans have historically performed well because people both need their cars and frequently own them outright.
“We wanted to find an asset class that was the most universally owned and understood in a way where we could provide the absolute cheapest cost of capital possible," said Miller.
So, a vehicle-secured credit card can help subprime consumers access a prime rate. (Yendo’s fixed APR is 29.88%. For reference, Amex’s variable APR is between 19.24% and 29.99%, and Chase Sapphire’s variable APR is up to 29.99%.) Yendo’s goal is to provide comparable access to those who wouldn’t have previously had it. "We’re both internally and externally locked into our prime rate,” Millet said. “We literally cannot go above the current rate that we have."
This gets to the essence of the biggest outstanding question: How does Yendo prevent its product from becoming predatory? How can they fill that need in the marketplace for true dependable credit, for everyone?
The case that Miller makes is that Yendo’s entire business model falters if they have to start repossessing cars with any kind of frequency whatsoever—that would mean the underwriting model has flopped.
Wesley Chan, FPV Ventures cofounder and managing partner, had the exact same question as he was doing diligence on the company and its underwriting process.
“We sat down and looked at his numbers and said, ‘Who are you letting in?’” Chan recounts. “We talked to the team who underwrites it, and they want people who will pay them back. The more they own the car, the more they use it, the more they stick with Yendo, the more money he makes…He wants people to stick with them forever rather than f--k them.”
Yendo’s total addressable market is in the vicinity of $120 billion, the company estimates, and it undergoes the same regulatory review that all banking products go through, Miller tells me. And the company’s customer “is the everyday working person, 35 to 50 years old,” said Miller.
“They’re living in Waxahachie, Texas, Orlando, Florida, or Auburn, Alabama,” he added. “They’re trying to go to school, or trying to figure out how to pay for their kids’ books.”
I spoke to one of those customers, Mela Lewis-Moss, a social worker and mother of five, referred to me by the company. She praised the app’s ease of use and told me that, even when she accidentally missed a payment, she didn’t feel stressed—that Lewis-Moss felt as though the company treated the moment like a misunderstanding, rather than an opportunity to penalize her. For Lewis-Moss, the text-forward nature of the customer experience at Yendo has really worked.
"You feel like someone's just there for you,” said Lewis-Moss, adding that the mechanic of texting is intimate and immediate, building trust.
How will Miller know, over the next few years, if Yendo is both successful and has avoided becoming the predatory lender it hopes to displace? I tell him we should plant a flag, and he’s direct.
"Killing title lending is a good indicator of success," he said.
You could say the goal is to give credit where it’s due—widely.
See you tomorrow,
Allie Garfinkle
Twitter: @agarfinks
Email: alexandra.garfinkle@fortune.com
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