Car financing disrupter Carmoola has raised £27 million in seed funding from high-profile angels and VCs including the investment fund of Jaguar Land Rover.

The newly launched FinTech, based in London, was founded by British, Ukrainian and former Movebubble and Zoopla executives Aidan Rushby, Amy McKechnie, Roman Sumnikov and Igor Gordiichuk.

The seed round featured InMotion Ventures, VentureFriends, BCI and California-based Clocktower Ventures. It also included angels that have backed companies such as Revolut, Marshmallow, Clearscore and Monzo, including the former MD of Google (UK and Ireland), Dan Cobley.

Carmoola seeks to empower consumers with a budget and finance decision in 60 seconds, giving them the freedom to buy a vehicle instantly with a virtual card online at places like Cazoo or at a car dealership. 

It aims to cut out the middleman, saving buyers money with better value finance and discounts for choosing green cars. Carmoola also breaks the rigidity of traditional contracts, allowing motorists the flexibility to adjust terms and payments simply in-app. 

It is encouraging consumers to rethink the way they pay for a second hand car – understanding what they can afford first before beginning their search.

The investment will be used to develop the product and launch the initial stages of the business. 

In 2020 Rushby decided to drive to Mallorca with his sausage dogs for an extended break and looked into options for buying a second-hand car.

“Like many people, I went into it without a clear idea of how much I should spend or could afford,” said the CEO.

“You find ‘the one’ and then have to go through this confusing, paperwork-laden and painfully slow process of seeing if you’ll actually be approved for it. 

“The process is broken. Rather than the afterthought, your budget should be the first thing on your list.

“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.

“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.”

With lending secured against the value of the vehicle, which is vetted for accident history, mileage adjustments and outstanding finance, the service gives an extra layer of assurance protecting the consumer.

Motorists are given a virtual card. Once they have found the car, they can pay instantly, either online or at any car dealership with Apple/Google Pay.

“Although new online car marketplaces have made buying the car easier, they are still using traditional car finance lenders that remain in the dark ages and consumers are paying for this,” continues co-founder McKechnie, an expert in product and marketing.

“Underwriting is being done and reviewed manually on a case by case basis. Clunky off-the-shelf loan management systems are preventing companies from problem solving and automating processes, meaning there’s more manual work required in servicing loans – all of this cost is being passed onto the consumer.

“Existing lenders are also paying 15-20% of the loan amount in broker commission. And who do you think pays for that?”

Going into business with my brother made our relationship stronger

In the UK last year, there were 7.5m car purchases with an average price of £13,705, while the UK market is valued at £120 billion.

And yet, only 19% of consumers use finance for this transaction and just 2% of these transactions happen currently online, making huge potential for growth.

Rushby and McKechnie were joined by Ukrainian tech experts Roman Sumnikov and Igor Gordiichuk, who they had met at a previous business. 

Alex Smout, principal at InMotion Ventures, aid: “Up to now car finance has been clunky and intimidating, leaving many feeling frustrated and trapped. Carmoola has reinvented how people pay for cars, focusing on transparency and flexibility to give consumers confidence in the process and access to a greater range of vehicles. 

“We look forward to supporting Aidan and his team as they grow their game-changing approach to purchasing.”