Motoring fintech Carmoola has raised £27m in a seed round, including capital from Jaguar Land Rover’s investment fund.
London-based Carmoola will use the seed round investment to develop its product and launch the initial stages of the business, which provides an automated finance check for purchasing a car.
Its motoring finance app lets users find out how much they can borrow in under a minute and has no broker commissions.
It then creates a virtual card that can be used to purchase a vehicle online or at a dealership – including at UK-founded online car retailer Cazoo.
The Carmoola app also gives customers the option to increase, pause or make single payments without any penalties or charges.
The company is aiming to bring the digital disruption of the UK’s vibrant fintech sector to the world of car finance.
“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,” said Aidan Rushby, CEO, Carmoola.
“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.”
Further investment came from VentureFriends, BCI, California-based Clocktower Ventures and a collection of angel investors including Dan Cobley, the former UK and Ireland MD of Google.
The hefty seed round follows on from Carmoola’s pre-seed round of £320,000 in April last year.
Carmoola offers lower APRs on electric vehicles and says it passes on savings from ESG debt funding to its customers.
“Existing lenders are also paying 15-20% of the loan amount in broker commission. And who do you think pays for that,” added McKechnie.
Carmoola is also looking to offer insurance and a method to spread the cost of vehicle maintenance.
“Consumer fintech has been driven by improved user experience, but the process for applying for used car finance is opaque and frustrating. Carmoola has transformed the process into a user-centric app that we’re confident will become consumer’s preferred option to finance their next car,” said Apostolos Apostolakis, partner, Venture Friends.
According to Carmoola, there were 7.5 million car purchases with an average price of £13,705 in the UK last year. With only 19% of buyers using finance and 2% happening online, Carmoola is entering a lucrative market estimated to be worth £120bn.
Carmoola will be hoping to follow in the footsteps of other successful British digital car retailers such as Cinch and Cazoo, with investors pouring a combined $6bn into the two firms.
This follows a bumper 2021 for UK fintech investment, with companies raising $11.6bn in capital.