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Getting your Trinity Audio player ready...
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By: Sara Miller
An Israeli-created company is helping consumers navigate a myriad of lending schemes when buying expensive items, enabling them to find the best deals for financing – in real time and on demand.
ChargeAfter helps vendors instantly provide big-ticket buyers with a range of potential lenders on one innovative platform, allowing them to choose the best loan option for them – saving them money and boosting acceptance rates. The list of lenders is provided by the seller when they go to make their purchase, through the ChargeAfter platform.
“There is a very big need here,” ChargeAfter founder and CEO Meidad Sharon tells NoCamels.
“We enable the merchants via one integration to be connected to a network of lenders that would enable consumers to be approved in 80 percent probability instead of 30 percent,” he says.
Not only does this offer consumers a range of financial choices, he explains, but also provides “an optimized and personalized solution.”
Sharon compares it to searching for the best deal for a vacation, with the consumer using a search engine to find a hotel rather than evaluating every holiday spot individually themselves.
“We don’t need to go to the Hilton [hotel chain website] to search there for hotels because we can search everywhere in seconds and get the best options,” he says.
ChargeAfter operates as a white label company – acting as an invisible broker for the financial institutions and vendors.
The company was founded eight years ago in Israel, and today is based in New York with offices in Tel Aviv. It works with dozens of financial institutions across the world, primarily in the US, where its partners include Citi, Synchrony and Wells Fargo.
In fact, the company has just entered into a new partnership with Citi, which is using ChargeAfter’s Lending Hub technology for its credit solution provider Citi Retail Services.
“Citi chose our technology so they can focus on giving the consumers the best underwriting service,” Sharon says of the new partnership.
The ChargeAfter platform works by analyzing “four to five data points” about the individual consumers, Sharon says. This includes Social Security numbers, date of birth, income and cellphone number.
Using APIs (the company is “deeply integrated” into the banks it works with, he says), ChargeAfter then checks the buyer’s credit availability with all the institutions in the company’s network that offer loans, and provides several suggestions for the line of credit, which are then shown to the consumer by the vendor.
“We will usually present between one to three [options], because you came to buy a computer not to shop between loans,” Sharon says. “We are an enabler, not the target of your journey.”
He explains that the range of different loan offers stem from the fact that while the banks base their decisions on the same information, they have different algorithms for underwriting.
“Someone is giving more value to the income, someone else is giving more value to the credit score or to how much history you have on the credit score,” he says.
The company’s data shows that in about 40 percent of cases, consumers will receive different credit ratings from different banks even when based on the same information.
The financial offers could also include a variety of repayment schemes, Sharon adds, for example giving the customer a choice between long- and short-term loans.
“We will present the best options to the consumer and they can choose,” he says.
According to Sharon, the technology to provide this service did not exist until it was developed by ChargeAfter.
“Five years ago, there wasn’t any ability for a bank or financial institution to underwrite you and to tell you whether you are a prime consumer or subprime,” he says, referring to buyers with high credit scores and those with a low one, respectively.
With this range of credit scores in mind, the platform operates a “waterfall” system, where consumers with the strongest rating are offered payment schemes with the most favorable terms (as they are seen as the lowest risk).
Consumers who have a slightly lower credit score are given options for lenders that cater to them and subprime customers who are seen as more of a risk are directed to financial services suited to them.
Sharon points out that the platform creates competition between banks vying for business from both consumers and vendors, which is good for both.
What is more, he says, vendors are also eager to find the best financing for the consumer, as it means better sales for them. This could even mean financing with zero percent interest.
“We are giving you choice and personalization and it’s a better experience for the consumer,” he says. “This is democratization of credit.”
