- UK-based Carmoola launched its app in March 2022
- It is looking to transform the ‘cumbersome and complex’ car finance market
A fintech platform that pledges to shake-up the ‘broken’ car financing industry has secured millions from investors, including Jaguar Land Rover.
UK-based Carmoola, which launched its app in March 2022, has received a further £15.5million from investors, bringing its total funding to £146million.
The platform is looking to transform the ‘cumbersome and complex’ car finance market and remove ‘the knowledge imbalance that comes with traditional outdated lending models’.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 nobody was doing anything about it.’
Carmoola promises to make the process of getting a car on finance a much smoother process.
Customers can find out their budget, run a free history check on the car, and then pay for the car in a matter of minutes.
Carmoola provides hire purchase car finance, which means customers can buy a car now, and pay it back monthly over 1 to 5 years.
It also recently launched a refinancing feature, which it says can help people switch from their existing agreement in just 8 minutes. Crucially there are no dealership commissions or middlemen involved.
The investment comes just days after the financial regulator announced it planned to crack down on the car finance industry, with a review into the commission arrangements and sales of ‘several firms’.
Should the probe find ‘widespread misconduct and that consumers have lost out’, the Financial Conduct Authority has vowed ‘to make sure people who are owed compensation receive an appropriate settlement in an orderly, consistent and efficient way’.
It follows the FCA’s 2021 decision to ban discretionary commission arrangements, which removed the incentive to raise the interest rate that customers pay.
Rushby told This Is Money: ‘For too long, the car finance sector was plagued by hidden fees, complex terms, and opaque pricing structures, leaving many car buyers feeling confused and, frankly, taken advantage of.
‘The discretionary commission approach, which effectively incentivised dealerships to increase the interest rates applied to loans that they arranged, was failing consumers, 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 prioritising customers is essential.’
He added: ‘We saw the opportunity to do better and rebalance the situation in favour of the consumer, and our financial backers shared this vision. Now that we have proven our concept we are ready to bring our product to even more people.’
The investment came from fintech specialists QED Investors, which led its Series A round in February 2023, and other venture capital firms, including the investment arm of Jaguar Land Rover.
Carmoola plans to use the latest funding to invest in its marketing and partnership.
Yusuf Özdalga, partner and head of Europe at QED Investors said: ‘Carmoola is shaking up an industry that had grown and remains complacent, and is addressing the poor customer outcomes and unnecessary hurdles that the incumbents have allowed to take hold.’
