Although new online car marketplaces are making buying a car easier, they are still using traditional car finance lenders that remain in the dark ages, and consumers tend to end up paying for this more often than not.
Changing the game is London-based online motor financing platform Carmoola. The startup is trying to slash car financing paperwork and has raised £27 million in funding for doing so. The round saw the participation of Jaguar Land Rover’s investment fund, InMotion Ventures, VentureFriends, BCI, and California-based Clocktower Ventures. The seed round also included a host of high-profile angels that have backed companies such as Revolut, Marshmallow, Clearscore and Monzo, including the former MD of Google (UK and Ireland), Dan Cobley.
The additional cash will be used to develop the product and launch the initial stages of the business. Founded by British, Ukrainian and former Movebubble and Zoopla executives Aidan Rushby, Amy McKechnie, Roman Sumnikov, and Igor Gordiichuk, the startup empowers consumers with a budget and finance decisions in sixty seconds, giving them the freedom to buy a vehicle instantly with a virtual card.
Cutting out the middleman, saving buyers money with better value finance and discounts for choosing cars, the company breaks the rigidity of traditional contracts, allowing motorists the flexibility to adjust terms and payments simply in-app. Carmoola claims that as lending gets secured against the value of the vehicle, the service gives an extra layer of assurance protecting the consumer.
Aidan Rushby, co-founder and CEO, Carmoola said: “You find ‘the one’ car and then have to go through this confusing, paperwork-laden and painfully slow process of seeing if you’ll actually be approved for it. The process is broken. Rather than an afterthought, your budget should be the first thing on your list. There's an incredible fintech revolution going on. And yet, car financing seems to have been forgotten about. It’s like a complete old banger. The freedom to go shopping anywhere, knowing what you can spend, without sending off reams of forms and payslips, puts the consumer immediately in control of their car purchase.”
Amy McKechnie, co-founder, Carmoola said: “Underwriting is being done and reviewed manually on a case-by-case basis. Clunky off-the-shelf loan management systems are preventing companies from problem solving and automating processes, meaning there’s more manual work required in servicing loans - all of this cost is being passed onto the consumer. Existing lenders are also paying 15-20% of the loan amount in broker commission. And who do you think pays for that?”
Alex Smout, principal, InMotion Ventures concluded: “Up to now car finance has been clunky and intimidating, leaving many feeling frustrated and trapped. The platform has reinvented how people pay for cars, focusing on transparency and flexibility to give consumers confidence in the process and access to a greater range of vehicles.”