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Uber's Subprime Auto Leases Sound Awfully Predatory

Credit-poor drivers are reportedly becoming indentured to their cars by the ride-hailing behemoth. Is it time for a “fair-trade” alternative?
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REUTERS/Sergio Perez

Uber’s claims to be a steady income supplier have grown shakier with every labor lawsuit and fare cut. Now an investigation by Bloomberg goes inside the world of the company’s year-old, Delaware-based auto-financing subsidiary, Xchange Leasing LLC, whose model appears to be as predatory as they come.

Somewhat like the subprime mortgages that imploded the U.S. economy in 2008, Xchange appears to target consumers who don’t have the credit to qualify for a conventional car lease. According to Bloomberg, Xchange is leasing cars using a line of credit worth $1 billion, which exposes the risky leases to “many of the world’s biggest financial institutions,” including Goldman Sachs, Citigroup, JP Morgan, Morgan Stanley, and Sun Trust. Meanwhile, the seemingly “low” weekly or monthly payments that these leases offer credit-poor consumers can quickly skyrocket far above the real value of the car, locking drivers into a deal many can’t ultimately afford.