JOHANNESBURG – Online taxi-hailing service Uber has agreed a R200 million ($14 million) deal with South African vehicle finance provider WesBank to rent cars to drivers who can’t afford to buy them, the companies said on Tuesday.
WesBank, which is an arm of lender FirstRand, will rent cars to Uber drivers who do not qualify for traditional car loans due to a lack of credit history.
Around half of car loan applications are declined in South Africa, WesBank chief executive Chris de Kock told a news conference.
WesBank will recoup the loan from the fares Uber drivers collect from passengers, lowering default risk, de Kock said. The amount drivers repay will depend on the level of business they are doing.
Uber Technologies, currently valued at over $50 billion, uses a free GPS-enabled app to link drivers from private car companies to passengers at cheaper rates and promises a quicker response time – often within 10 minutes.
San Francisco-based Uber was launched in South Africa in August 2013 and operates in over 60 countries. Uber clocked two million rides in South Africa in the first six months of 2015, Uber said.
FirstRand’s enterprise development group Vumela will educate drivers on running their own business and also provide cash to WesBank if car loans are not paid. It will also finance R20 million for the first 1 000 cars, Uber said.
($1 = R14.2921)