While traditional car finance lenders still exist in the dark ages, new online vehicle marketplaces are making it easier to buy a car, but more often than not, consumers pay the price.
Revolutionising the game is London-based online car financing platform Carmoola, which has now raised a £8.5M Series A round and £95M debt facility as it plans to cut car financing paperwork.
The round was led by US-based fintech specialists QED Investors (backers of Klarna, ClearScore, Nubank and more), with participation from existing investors European early-stage VC VentureFriends and InMotion Ventures, the investment arm of Jaguar Land Rover, which also backed UK-based car repairs BNPL payment platform, Bumper.
Moreover, it includes a debt facility provided by Natwest, setting up Carmoola for rapid growth in a market worth £120B in the UK alone. Recently, Zenobē Energy also secured a £235M long-term project finance debt facility structured by NatWest.
Transforming auto finance
Founded in 2021 by Aidan Rushby (founder of home rental app Movebubble), Amy McKechnie (Director of Product and Marketing), and Ukrainian co-founders, Roman Sumnikov and Igor Gordiichuk, Carmoola previously has also got backing from popular companies such as Revolut, Marshmallow, Clearscore and Monzo, including Dan Cobley, the former MD of Google (UK and Ireland).
The broker commission-free motoring finance app helps consumers quickly determine how much they can borrow and will continue scaling the business by expanding the team to 20 individuals. Additionally, the UK fintech will introduce green discounts in the coming months to encourage greener choices.
Carmoola CEO Aidan Rushby said: “Used-car finance couldn’t be more ready for a fintech revolution. Consumers want the freedom to go shopping anywhere, knowing what they can spend, without sending off reams of forms and payslips.
“Frustrated consumers are being put in a corner with excessive rates, manipulated commission, and poor customer service, but it’s the very process of getting finance that is at the heart of the problem. It’s full of paperwork, lengthy processes, and lack of certainty, but most importantly, car finance is obtained after the consumer has fallen in love with the car they want, which wholly puts them on the back foot. Until now, that is.”
Yusuf Özdalga, Partner and Head of Europe at QED Investors, the backer of finance unicorns Remitly and NuBank that led the round into Carmoola, said: “Having not adapted to modern expectations for the consumer, the car finance industry has been caught off guard by the new neo-car finance brand Carmoola, who champion the consumer at every part of the process. Carmoola is on track to dominate the car finance sector with a game-changing approach to purchasing.”
How does it work?
Carmoola is the first fully automated flexible car financing platform. It calculates an affordable budget and an approved credit decision in 60 seconds.
Furthermore, a virtual card is generated that may be used to purchase a vehicle online or at a dealership. Additionally, customers can increase, pause, or make single payments via the Carmoola app without a fee.
In addition to eliminating middlemen, the company also offers better financing and discounts on selected automobiles, allowing drivers to change terms and payments easily in the app.
Also, it claims to be the only finance company to offer discounts for choosing green cars, such as lower APRs on electric vehicles.
