This fintech provides unsecured loans targetting the avocado generation
As if millennials needed another reason to feel sorry for themselves.
A deep financial divide is emerging among millennials – and the divide has everything to do with class, a new survey by Elevate’s Center for a New Middle Class has found.
Most millennials have low incomes and few assets – making them sub-prime borrowers. They live payday to payday, have no spare income at the end of the week, and could not produce $1,200 in an emergency.
Their financial precariousness puts them in the “New Middle Class”, the survey said.
“We’ve all heard the stories of the rising generation’s materialism, fickle attitude toward responsibility and robust sense of entitlement,” wrote Jonathan Walker, the Center’s director.
“Aside from making good fodder for a Baby Boomer gripe-fest, this way of seeing Millennials fails to explain the unique challenges facing this generation.”
While the forecast of sub-prime millennials looks bleak, the prime millennials are doing well, the survey found. They are starting families, have solid jobs and earn good money. They have access to financial advice and products; indeed, one of this group’s defining features is their freedom to use a credit card.
It is this dynamic – the dichotomous fortunes of prime vs. sub-prime millennials – that Elevate wants to tap into.
Elevate are a fintech lender that provide small unsecured short-term loans at high interest rates, very similar to payday loans. The business is based in America, but has expanded into Britain.
The company targets sub-prime borrowers, including the millennials it surveyed. Backed by Sequoia Capital, the company went public earlier this year.
With revenue of around $580 million at the end of last year, Elevate has performed well. But the company has come under fierce attack from activist groups.
“Elevate raked in over a half billion dollars in 2013 alone. And they showered over $210,000 of that cash on federal lobbyists to attempt to hinder regulations of the payday loan industry,” wrote Allied Progress, a left-leaning pressure group.
The group also criticised Elevate for its high interest rates - around 380 percent, they claim.