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Exclusive: Car-secured credit card startup Yendo raises $24M

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Jun 20, 2023
illustration of a sedan with a license plate styled to look like a chip credit card

Illustration: Tiffany Herring/Axios

Yendo, an issuer of a credit card collateralized by car ownership, raised a $24 million Series A, led by FPV Ventures.

Why it matters: Vehicles are the second-most-held asset in U.S. households — behind savings and checking accounts — per 2020 data from the Census Bureau. But you don't see them used to backstop credit cards.

How it works: Yendo judges a consumer's ability to repay by checking self-reported consumer income and expense data with alternative data sources. Credit scores don't factor into the equation.

  • The company's unique ability, as CEO Jordan Miller sees it, is judging the value of the consumer's car.
  • "We've spent the better part of three years building computer vision A.I. models that allow us to value vehicles much better than a standard index," he says.
  • Yendo uses photos of the car and license plate to assess its age and condition, verifying its driving history by plugging into DMVs nationwide. It also factors in car auction figures.

By the numbers: Based on the value of the car, Yendo extends credit lines of up to 55% of the car's value — from $450 to $10,000. That exceeds the typical amount offered by cards secured by cash.

  • Yendo makes money from a mix of interchange, fees and interest.

Details: Yendo, which launched in October, targets creditworthy consumers who own their vehicle outright but have slipped through the traditional system.

  • That may include students who have never had a credit card, immigrants without a stateside credit history, or folks who had previous issues but have improved their scores.
  • Miller says the company has thousands of customers and that their average annual income exceeds $50,000.

Between the lines: The company believes it can lower delinquency rates through its underwriting model — boosting its revenue — and attract consumers with its more flexible credit line, at least when compared against secured cards.

Of note: Yendo's card charges s 24.99% APR, which is more than the 20.49% market average credit card, according to Bankrate data, but below the rate charged on so-called car-title loans or payday loans.

  • Car-title loans, a personal loan collateralized by a vehicle, come with predatory rates that can translate to about 300% APR, says Bankrate senior industry analyst Ted Rossman. The typical payday loan, meanwhile, equates to around 400%.

The big picture: Yendo's raise comes as fintech investors have grown less bullish on consumer-facing startups and as the financial health of the U.S. consumer has come into question. That hasn't entirely frozen the market.

  • "It's how we make our returns, finding these companies that the rest of the market or the rest of the world ignores, because we find a contrary view on the world," says FPV's Wesley Chan, who is joining the company's board.
  • Other investors include Human Capital, Autotech Ventures and Mark Cuban.
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