- The British Carmoola launched its app in March 2022
- It wants to transform the ‘cumbersome and complex’ car financing market
A fintech platform promising to shake up the ‘broken’ car finance industry has secured millions from investors including Jaguar Land Rover.
UK-based Carmoola, which launched its app in March 2022, has received a further £15.5 million from investors, bringing its total funding to £146 million.
The platform aims to transform the “cumbersome and complex” auto financing market and “eliminate the knowledge imbalance associated with traditional outdated lending models.”
Carmoola CEO Aidan Rushby says the car finance market is ‘broken’ and needs to change
Co-founder and CEO Aidan Rushby said: ‘Carmoola came about because we could see that the used car finance market was broken, but the status quo suited traditional lenders just fine so no one did anything about it.’
Carmoola promises to make the car financing process much smoother.
Customers can find out their budget, run a free car history check and then pay for the car in minutes.
Carmoola offers hire purchase car financing, meaning customers can buy a car now and pay it back monthly over a period of 1 to 5 years.
The company also recently launched a refinance feature, allowing people to switch from their existing deal in just eight minutes. Crucially, there are no dealer commissions or middlemen involved.
The investment comes just days after the financial regulator announced it planned to crack down on the car finance sector, with an investigation into the commission schemes and sales of ‘several companies’.
If the investigation finds that there has been ‘widespread misconduct and that consumers have been victimised’, the Financial Conduct Authority has pledged to ‘ensure that people entitled to compensation receive an appropriate settlement in an orderly, consistent and efficient manner’. way’.
It follows the FCA’s 2021 decision to ban discretionary commission schemes, which removed the incentive to increase the interest customers pay.
Rushby told This Is Money: ‘For too long the car finance industry has been plagued by hidden fees, complex terms and conditions and opaque pricing structures, leaving many car buyers feeling confused and, quite frankly, taken advantage of.
‘The discretionary commission approach, which effectively incentivized dealers to increase the interest rates applied to the loans they took out, left consumers short-changed, so the FCA’s call for clear disclosures, improved affordability assessments and a culture of responsible lending sends a strong message to the industry that prioritizing customers is essential.’
He added: “We saw the opportunity to do better and rebalance the situation in favor of consumers, and our financiers shared this vision. Now that we’ve proven our concept, we’re ready to bring our product to even more people.”
The investment came from fintech specialists QED Investors, which led the Series A round in February 2023, and other venture capital firms including InMotion, the investment arm of Jaguar Land Rover.
Carmoola plans to use the latest funding to invest in marketing and partnerships.
Yusuf Özdalga, partner and head of Europe at QED Investors, said: “Carmoola is shaking up an industry that has grown and remains complacent, addressing poor customer outcomes and unnecessary hurdles created by incumbents.”