Idea Bank launches “pay as you drive” car loan in Poland
Idea Bank in Poland has launched “the world’s first pay-as-you-drive” car loan model –Happy Miles – with the payments calculated according to the travelled distance.
A GPS device installed in the vehicle automatically sends the information about the distance covered to the lender.
“Monthly payment is the distance multiplied by a kilometre-based rate, plus a small fixed amount,” Idea Bank says.
Happy Miles is the brainchild of the bank’s board member Dominik Fajbusiewicz.
“We are creating an engine that might become widely popular in services associated with the financing of sales and rental of passenger cars, trucks, agricultural machinery and construction equipment,” he hopes.
“The car loan market is the first we want to introduce the new technology to. Fintech trends are quite strong in the banking sector, but the car financing services lack innovation.”
Leasing is a popular form of car financing in Poland, he notes. “It’s like the market’s asking us to be transformed”.
Idea Bank’s recent acquisition of Getin Leasing (which, combined with the bank’s existing leasing business, covers 15% of the country’s car loan market) “has provided us with some perfect tools to do so”, Fajbusiewicz adds.
The Happy Miles concept is in line with the current economic trends of a sharing (also known as access or gig) economy, Idea Bank explains. These trends “have laid the foundations” for companies like Netflix, Spotify and Uber, as people are shifting from “having” to “using”.
“We believe that the pay-as-you-drive model will turn the tides for many entrepreneurs. Not only it allows for adjusting financial obligations to the company’s cash flow; it also brings additional benefits to having a GPS device installed in a vehicle,” says Łukasz Domański, Happy Miles project manager.
Having a GPS device in a car will also enable companies to track vehicle location, the use of fuel, speed, breaking distance, acceleration parameters, driving time and drivers’ working hours, he adds.