The UK car finance sector has often relied on dealership-based lending, bringing added fees and commissions that some consumers find restrictive.
Carmoola, a direct-to-consumer fintech, recently secured a £100million debt deal with NatWest, positioning itself to offer a different approach, with rates it says are more competitive and accessible.
In this week’s Behind the Idea, CEO and co-founder Aidan Rushby delves into Carmoola’s journey, the challenges of building a new finance model, and his vision for making car finance simpler and more transparent for consumers.
Aidan Rushby, co-founder and CEO, Carmoola
Tell us more about your company and its offering
Founded in March 2021, and trading since March 2022, Carmoola addresses the challenges of traditional car financing by providing a digital platform that delivers instant budget approval through a user-friendly app.
Carmoola’s unique approach allows customers to secure financing within minutes, eliminating cumbersome paperwork and hidden fees. With Carmoola, customers receive a virtual card that can be used online or at dealership, streamlining the purchasing process with a simple ‘transfer or tap’ payment option, including Google Pay and Apple Pay.
This technology-driven model not only enhances the customer experience but also keeps operational costs low, resulting in better value and outcomes for customers. Carmoola is committed to transforming the UK car finance market, making car buying as straightforward as booking a holiday online.
With advanced, proprietary technology and data platforms, Carmoola is empowering its users to shop with confidence, knowing their budget upfront and having the flexibility to manage their account through the app. With significant investment backing and a visionary leadership team, Carmoola is set to redefine how people finance cars, making it the preferred choice for the modern car buyer.
What problem was your company set up to solve?
In the UK, car buyers generally organise their car finance through legacy lenders. This tends to come with high commission models paid out to middlemen, and which the customer ultimately foots the bill for. Historic commission structures are under investigation by the Financial Conduct Authority (FCA) as they could have resulted in unfair outcomes, where profit is pursued at the expense of what’s best for customers.
We aim to make the whole process much easier, simpler and more transparent by giving customers the opportunity to sort their car finance out directly with the lender – i.e. Carmoola – prior to going to the dealership.
This gives car buyers the confidence of knowing how much they can afford and the reassurance that they are able to borrow the amount they need.
We also allow customers to carry out unlimited vehicle history checks through the app, which can reveal whether the car they are interested in is being sold at a fair price, if it has a less-than-ideal history, or if there is outstanding finance on the vehicle.
Since launch, how has your company evolved?
We moved quickly from a proof of concept to a viable product, and one that has been valued by customers – reflected by both the rate of growth we’ve experienced and the overwhelmingly positive feedback we’ve received. Our net promoter score is 92 and our average rating is 4.9/5 across reviews platforms.
The focus of the business has always been on smart growth. It’s all too easy to just throw more people at something as you evolve, but we’ve managed to keep headcount lean – and dramatically lower than traditional players in our industry – by investing in, and building, smart, data-driven processes, a world-class decisioning engine, and leveraging AI in ways that do a great deal of the heavy lifting, allowing our people to bring their creativity and ambition to everything we do.
What has been the biggest challenge or most ‘tricky moment’ to overcome?
Our chief technology officers – Roman and Igor – and engineers had performed near-miracles to build the tech to power our product against the truly dire backdrop of the war in Ukraine which saw half of the tech team > starting a new life in Warsaw, and the other half of the team were still, and remain in, Ukraine.
I have never met such a solid group of people, but this was a painfully stressful situation for all involved.
Around this time the business was progressing rapidly and customers loved the app and experience, but we were running on very little cash and that loomed large over everything we did.
So, we started raising the Series A round just three months after launch. I thought this would be a walk in the park with the performance we could already demonstrate, but I was about to be proven wrong. It actually ended up being one of the hardest things I have ever had to do.
Not every VC understands how lending businesses work and this, coupled with a macro environment that was less than confidence-inspiring, meant that I was coming up against a lot of closed doors, with the VC holiday period approaching fast, and cash running out even faster.
But, as luck would have it, on the last day before the holiday, I spoke to QED Investors, a VC that specialises in fintech, and the rest is history.
What are your biggest achievements or ‘proudest moment’ so far?
Getting our first ever customer was massive. I remember waking up at 5.30am one morning excited to see if that would be the day we got our first > customer, and by 8.30am we had done it!
Having someone find us, sign up, go on to purchase their car, and leave us a five star review was both humbling and exciting.
Like all new businesses, in the beginning there were so many challenges to overcome and everyone was working so hard, seven days a week, for months, powered purely by adrenaline. Looking back it was so much fun, and I do really miss it.
The fact we’ve now processed over two million applications, and funded the purchase of almost £100million worth of cars is pretty mind blowing, in such a short space of time.
The moment we passed over 1,000 five-star reviews on Trustpilot was also hugely important, not just for me but for the whole team, whose commitment and focus has led to such overwhelmingly positive customer experiences.
We have many more milestones ahead of us than behind us, but knowing that we are doing things in a way that matters to customers, while also being commercially sustainable, is no mean feat.
How would you describe the culture of your company?
In a word: entrepreneurial. If your goal is to build a world-class company with amazing products – which is what we are doing – then this takes years and people need to be empowered to make decisions every day. We believe that having the right values helps enable the team to make more of the decisions that move us closer to achieving our vision.
Our values are communicated at the earliest stage of the recruitment process, and reinforced every week through our company wide calls where we nominate others who have exemplified a certain value that week, as well as through our quarterly and annual awards.
What’s in store for the future?
For now, we’re focused on the used car finance market in the UK, as there’s still so much potential there. Plus, with the FCA investigation into car finance mis-selling, the sector is firmly in the spotlight and, as a responsible lender that has never engaged in the practices that sparked the FCA inquiry, we are well positioned to help people that, understandably, no longer trust traditional credit options.
Beyond that, I believe there’s huge scope to bring ease and value to other elements of the cost of car ownership and become the ‘everything app’ for motorists. Insurance, warranties, maintenance and so on are all necessary elements running a car, and ease and value is lacking there, too. Geographic expansion, particularly into Europe and the US, is also attractive, but our next steps will always be dictated by opportunity and customer need.
The post Behind the Idea: Carmoola appeared first on The Fintech Times.
