[Update: The article below is not true. There is no Lending Club partnership with Tesla. So, if you have just stumbled upon this story you should know that it was published on April 1st as an April Fools joke.]
In a joint press release today, Lending Club and Tesla have announced a brand new loan program. In an industry first Lending Club will be providing auto loans to buyers of new Tesla vehicles in this brand new program.
“Tesla has been a leading force for innovation and disruption in the auto industry,” said Lending Club CEO Renaud Laplanche in a statement today. “Lending Club is having a similar impact on financial services so it made sense for us to partner with Tesla in this new service.”
Details of this new partnership have yet to be revealed but sources tell me that these will be five year loans of up to $50,000. Interest rates will depend on the creditworthiness of the borrower but given that a Tesla Model S starts at a retail price of $69,900 these will be very much prime borrowers. So, I expect these loans will be rated A-grade and have interest rates in the mid to high single digits.
Sources have also told me that these loans will actually be secured with a lien on the vehicle. This is very significant news. Not only will this be Lending Club’s first foray into auto loans it will also mark Lending Club’s first offering of asset backed loans.
When I asked about whether these loans would be available for individual investors, not surprisingly Lending Club said they will be offered initially as whole loans to select institutional investors only. But just as with their small business loans Lending Club expects to eventually make these loans available to all investors.
My Take On This New Partnership
I have to think that these loans will be very popular with investors. Despite the high maximum loan size and relatively low interest rates, the fact that these are the first asset-backed loans offering by Lending Club means there will likely be high demand from investors.
If Lending Club was partnering with Ford or General Motors I would probably be a little more skeptical of this move. But given that these will be loans to high-end borrowers and a partnership with a successful and innovative automaker I can only see this as a successful move for both companies.
I have reached out to Elon Musk’s office at Tesla for comment but have not heard back yet as of this writing.