- Ally Financial is partnering with Mastercard’s Vyze to enter the retail point-of-sale lending space, the bank announced Tuesday in a press release.
- Ally will offer installment loans on retail purchases between $500 and $40,000 with interest rates ranging from 9.99% to 26.99%. Monthly fixed-rate installment loans will range from six to 60 months, the company said.
- Ally abandoned its credit card model last year to expand into point-of-sale lending when it bought Health Credit Services, a company that offered unsecured loans to finance medical procedures. The bank rebranded that partnership as Ally Lending.
Upon acquiring Health Credit Services, Ally CEO Jeffrey Brown said he wanted to apply that business's point-of-sale lending capabilities to other retail sectors. CFO Jennifer LaClair expressed the company's excitement last year at entering the point-of-sale space, citing an 18% to 20% annual growth rate. Outstanding balances on unsecured personal loans have jumped nearly 60% over the past four years to $138 billion, credit bureau TransUnion reported.
Ally, like Vyze, is banking that younger consumers, who may find credit cards hard to get or unpredictable, will favor point-of-sale lending's fixed monthly installments. Nearly three-quarters of retail customers surveyed by Business Insider last year said installments helped with budgeting. Further, 70% said installments eased the stress of making a large purchase. The company is banking, too, that the model results in increased sales for merchants.
"Mastercard's deep experience in global payment and technology positions Vyze as a leader in the point-of-sale lending market," Hans Zandhuis, head of Ally Lending, said in Tuesday's release. "Together, our partnership gives merchants, who want to offer consumers trusted and stable installment loan options, a powerful, digital option."