Photo of a computer monitor.
There are easy ways of getting loans online with ZestCash. CC by Rolf Hartmann (Erkaha)/Wikimedia Commons

ZestCash is a new online lending operation to serve the underbanked launched by a former executive of Google. Online loans through ZestCash of up to $500 were being made in Utah beginning Oct. 13. The company said it will use data, Google-style, to minimize risk and maximize benefits for its customers.

A new way of online lending

ZestCash was founded by former Google CIO and VP of engineering Douglas Merrill. Customers get to choose the length of their loan at ZestCash, reports TechCrunch. They also get to choose, up to $500, how much they want to borrow. The term of a loan is chosen by the customer with a little help from the ZestCash website. Small installments are used to pay back the loans. This mean there doesn’t have to be one big repayment. A payment schedule showing when their accounts will have money withdrawn from them is given to customers when they get a loan online. Also, if there are late payments, ZestCash tends to be flexible about them.

Lending with Google

ZestCash is entering a huge and growing market. According to the Center for Responsible Lending, about 12 million people take out payday loans each year. Last year $20 billion were lent. That was just in the payday loan industry. The FDIC shows that 18 percent of households in the U.S. are underbanked. That means 60 million people don’t have a relationship with a bank that would allow them to borrow a bank’s funds. Reuters spoke with Merrill about it. Merrill said customers will better be able to afford their loans with the “Google-style data” that ZestCash plans to use. Millions of people who couldn’t ever afford credit will start to be able to with the Google technology being applied to loan underwriting, he says.

Data crunching helps loans out

The no credit check risk that payday loan companies are taking are how the fees on the loans are determined. Quentin Hardy at Forbes said that ZestCash will analyze risk in a “Google-like data crunching way” that is new to the online lending industry. “Research in economics, math and computer science” is what ZestCash uses to make decisions, Merrill told Hardy. The data is found by ZestCash engineers. These engineers get the info through customer questionnaires, phone calls and information off the Internet. Merrill explains that true Google fashion means, “we believe all data is useful credit data.”

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