Vouch Financial operates an online lending platform that makes personal loans based on people “vouching” for the borrower.
“Your personal network could get you a better loan,” Vouch’s website promises.
The way it works is sponsors agree to pay a pledged amount if the borrow defaults on the loan. Personal loans can be used to consolidate debt, pay off a credit card, or even start a business.
Vouch does not charge an application fee. To be eligible for a loan from Vouch, you must be at least 18 years old and a legal U.S. resident with a verifiable bank account. Your FICO credit score must be 600 or greater, and those in bankruptcy or foreclosure are excluded.
To qualify for Vouch’s 11.01 percent APR (8.99 percent interest rate) you need a credit score of at least 640 and an annual income of $48,000 or more. Vouch loans are available to residents in all 50 states.
Vouch.com features a handy calculator tool which shows you quickly how your credit score, loan amount, and qualified sponsors affect your loan rate and terms.
Vouch makes loans of $500 to $15,000 with interest rates ranging from 7.35 percent to 29.99 percent. Lending terms are 1 to 3 years and vary depending on your credit score.
Beyond your credit score, you also can name sponsors who agree to pay part of the loan back if you default. The more sponsors you have, the better your chances of approval. More sponsors also translates into lower interest rates, higher loan limits, and longer payment terms. For example, one sponsor gets you an increase of $250 on your loan limit and a 1 percent interest rate reduction. If you recruit 5 sponsors, you can get up to 5 percent taken off of your rate.
Vouch charges an origination fee of 1 percent to 5 percent which is charged to you when you get the money. There are no annual or prepayment fees.
All loans made through Vouch are made by Cross River Bank, a New Jersey-chartered bank, member FDIC. Also, your sponsors agree to pay $100 each if you don’t make payments.
Vouch’s lending platform recently attracted $6 million in Series A funding from investors such as Core Innovation Capital, Data Collective, Stanford Start X, and Cooley LLP.
The application process is completed online, but you may need to send in other documentation by mail or upload. Sponsors are contacted by email, and the creditworthiness of each sponsor is also evaluated.
Consumer complaints and reviews
Vouch has been accredited by the Better Business Bureau since September 2015. The lender carries an A rating with the BBB and as of December the bureau had closed two complaints about the company.
Is Vouch a good choice?
For any borrower Vouch is a contender. It’s especially attractive for those with weak credit, but have a strong social network. If you can get enough sponsors, you might get a loan with Vouch that you can’t get anywhere else.
The only downside is that the platform is new. This means that some wrinkles might need to be ironed out with their service. Also, if the platform doesn’t survive, then your loan might end up being sold to another lender.
Vincent Chough is a writer who earned his medical degree from the University of Pittsburgh School of Medicine and practiced in the U.S. for 10 years. He now lives in Argentina, where he’s involved in NGO management at the executive level.