Pave wants to be the lender for young borrowers with ambition.
“We lend to those who are upwardly mobile — looking to get ahead in their careers or get on top of their finances, ” CEO and co-founder Oren Bass says.
The personal loans company started out giving new grads loans in exchange for a cut of their future earnings. That model, known as an “income-share agreement, ” proved too legally complicated.
So the New York-based lender turned its focus to personal loans for young borrowers, while preserving its vision of investing in a person’s potential. Pave now seeks to fund millennials who want to improve themselves, according to Bass.
Although it doesn’t place restrictions on who can borrow and how they use the money, Pave chiefly lends to young borrowers who want to enroll in educational courses, pay down credit card debt or cover relocation expenses for a new job.
What makes Pave different
Just like in traditional lending, credit matters when you apply for a Pave personal loan. Applicants need to have a minimum credit score of 660 to qualify; the company looks at both FICO and Vantage scores.
But credit is just a starting point, says David Rosen, the lender’s head of underwriting and a former risk manager for American Express.
Pave says it also considers factors such as education, employment history and cash flow to size up personal-loan applicants, not unlike other online lenders targeting millennials.
But the reason you’re applying for a Pave loan plays an important part in the company’s decision — and ultimately your interest rate, Rosen says.
For example, if an applicant plans to use the loan to enroll in an educational course, Pave will analyze data about that course and the person to estimate how much of an income bump he or she would receive after completing it. An applicant with the potential to earn more could qualify for a lower interest rate than a similarly qualified borrower who uses the money for, say, travel.
There are other perks to using the loan for self-improvement. Pave offers course-takers the option to defer payments for the first three months (interest still accrues, and the company will check to confirm enrollment).
Pave conducts an introductory phone call with every approved applicant to verify identity and solicit feedback on the lending experience. Here’s what else you need to know before applying for a personal loan from Pave:
Pave’s credit standards
- Minimum credit score required: 660
- Minimum gross income required: None
- Minimum credit history: None
- Maximum debt-to-income ratio: None
Pave’s lending terms
- Minimum loan amount: $3, 000
- Maximum loan amount: $25, 000
- Minimum loan duration: 2 years
- Maximum loan duration: 3 years
- Time to receive funds: A few business days
Pave’s fees and penalties
- Origination fee: 1% to 6% of loan amount, depending on APR
- Prepayment fee: None
- Late fee: 5% of payment due or $15, whichever is greater
- Personal-check processing fee: $2
Pave review: The bottom line
Pave offers competitive interest rates to those with short credit histories — although borrowers may find other lenders more flexible regarding due dates and late fees once the loan has been approved. But the company rewards borrowers who take the initiative to better themselves.
If you’re looking for a lender that will consider your potential, not just your past, Pave may be a good fit for you.
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