The microcredit industry recently entered the airline ticket business with the launch of Airfordable, a website that allows users to pay for their plane tickets in installments. To use the service, travelers submit a screenshot of an itinerary, submit trip details, and then make a deposit toward the overall cost. Until the departure date, regular payments can be made on the overall balance and once the loan has been paid in full, the ticket will be confirmed and sent to the traveler.
For the service, Airfordable charges a 10-20% fee based on the cost of the ticket and then automatically sets up a reimbursement plan. A $ 1,000 ticket required on Dec. 3, for example, would result in a “layaway cost” of $ 130, then $ 126.67 in bi-weekly payments until the date of travel.
Airfordable’s value sits at the intersection of prices for volatile notes and micro-lending instruments. By fixing the ticket price in advance, users can benefit from a better price on airline tickets while demand remains low and the departure date is still far away. And unlike getting a loan from a bank or using a credit card, a micro-loan from Airfordable doesn’t require a credit score survey, a potential problem. for travelers with little or no credit.
While some may view this lack of credit transparency as a handicap, Airfordable claims a 95% repayment rate, similar to other microcredit sites like Kiva, which see rates at. about 98-99%.
Founded in 2015 in Chicago, Ill., Airfordable officially launched its website last December after securing seed funding from Y Combinator, a startup incubator based in Mountain View, California. Last week, the company was boasting that he had helped more than 10,000 customers finance airline tickets. Once the business gets more traction, according to TechCrunch, he plans to expand his model to launch micro-loans for vacation packages and hotels.