Car Finance Fintech Raises $125M in Debt and Equity

• Car finance fintech Carmoola has raised $125 million in a mix of debt and equity.
• The London-based start-up offers credit for the purchase of used cars and encourages electric cars.
• Take a look at the 12-slide pitch deck it used to raise the fresh funds below.

Car finance fintech Carmoola has raised $10.3 million in a Series A round led by QED Investors and an additional $115 million in debt.

The London-based startup, founded in 2022, takes a buy-now-pay-later approach to car financing by offering loans for used car purchases in the UK. Users can enter the registration number of the vehicle they wish to purchase and be assessed for credit purposes within minutes, through the startup’s proprietary tech underwriting platform.

Traditionally, finance purchases are arranged through brokers or car dealers and often come at a premium price with poor customer service, Carmoola CEO Aidan Rushby told Insider. A frustrating and costly personal journey led the former CEO of home rental company MoveBubble to move into the car finance sector.

“I was blown away by how bad the experience was of financing a car with limited customer service and brokers taking a 15 to 20% cut of the payout,” Rushby said. “By cutting out the middlemen, we deliver lower acquisition costs and pass those savings on to the consumer.”

The service is not unlike a buy now, pay later, with Rushby comparing the platform to services such as Klarna or other UK fintech Zilch. Users are assessed on creditworthiness, offered a repayment plan, and then given a virtual card that they can use to purchase a vehicle from a brick-and-mortar dealer or through an online marketplace. Typical financing agreements tend to run between three and five years with annual annual interest rates between 6.9% and 24.9%. The company also offers a discounted APR for electric vehicle purchases in an effort to motivate customers to make greener choices.

The equity financing was led by Nubank backers QED Investors with participation from existing investors VentureFriend and InMotion Ventures along with $115 million in debt financing from UK bank NatWest. The round follows a seed round of $32.7 million, which also consists of debt and equity in April 2022.

The fresh capital will go towards expanding Carmoola’s offering at a time when existing players will struggle, Rushby said. The change in the interest rate environment and higher inflation will lead to margin compression on the loan book of larger rivals who signed deals before the energy crisis triggered by Russia’s invasion of Ukraine.

“Auto finance is one of the best asset classes during downturns, making it a great time to invest in a lending business in a new cycle,” he added.

Carmoola will increase its headcount from 17 employees to 23 by the end of the year and plans to be profitable in early 2024, Rushby added.

Check out Carmoola’s 12-slide pitch deck below: