(Reuters) - Private credit lender Castlelake will buy up to $1.2 billion in consumer installment loans from fintech firm Upstart to expand its foothold in the retail lending space, it said on Thursday.

The deal underscores how investment firms are increasingly pushing into businesses that have traditionally been dominated by banks as high interest rates and the fear of defaults force lenders to hesitate.

Castlelake clinched a similar agreement in May last year to buy $4 billion of loans from Upstart.

Upstart serves as an intermediary between borrowers and lenders. More than a 100 banks and credit unions use its platform to approve loans to customers.

(Reporting by Niket Nishant in Bengaluru; Editing by Anil D'Silva and Devika Syamnath)