CarClarity the leading car loan platform in Australia announced today a $1 million seed investment led by Equity Venture Partners (EVP).
The financing will be used to bolster CarClarity’s product and development efforts as it moves from car finance to disrupt the entire spectrum of the car buying experience within Australia’s $37 billion motor vehicle financing market.
CarClarity was founded in 2019 and launched in March 2020 by Zaheer Jappie, David Fahim and Luke Scott who have spent the past 10 years working in the country’s leading fintechs including Plenti, Prospa and FlexiGroup. As a car enthusiast working within the finance technology sector, Zaheer Jappie came to understand that there was a better way to find a car and secure finance and he set out to fix that.
“The stigma of the used car salesman derives from the consumer’s mistrust of the car buying process because, put simply, the process is broken. If you’ve ever browsed thousands of offers on Car Sales, negotiated a price whilst having no idea what is fair, then tried to get finance all whilst wondering what the fine print meant, you understand why CarClarity exists” said Mr. Jappie.
CarClarity provides an easy-to-use platform that connects borrowers with more than 30 different car finance lenders. It then matches each customer with lenders based on price and loan terms for that individual’s needs. Once the best borrowing option is chosen, borrowers are guided through an intuitive online application process to secure their financing.
With regulatory authorities considering the removal of the ‘point of sale exemption’ which currently allows car dealers to secure finance for buyers without needing an Australian Credit Licence, car dealers may need to look to third parties like CarClarity for finance solutions.
“Allowing people to lend to Australians without a licence presents risk and borrowers are wearing the cost of this. We are a compliant solution and we understand the importance of customer experience, channel partners and building a strong trusted brand. Our goal is to give the best experience to all parties when financing and purchasing a car. We consider dealers as a customer and with the removal of point of sales exemption, we will be positioned to offer dealers a compliant tech solution and operational assistance. Together, we will improve customer satisfaction and dealer performance” said Mr Jappie.
Following the investment, Mark Velik of EVP will join the CarClarity board of directors.
“CarClarity is introducing a simple, trusted and transparent experience to consumers. Today 39% of consumers are making financing decisions with limited options under time pressure in unlicenced dealerships. The remaining 61% are navigating an opaque market online. Australians are crying out for a straightforward way to find the best car financing options at the best price. CarClarity is well placed to solve this problem” Mark Velik of EVP said.
The disruption caused by COVID-19 has amplified the call for CarClarity’s solution as Australians have substituted public transport for personal vehicles. Used car prices have increased 40% since April as consumers compete to find and buy used cars online. Having initially declined, demand for new cars has also recovered with December 2020 new car purchases up 13.5% on December 2019 figures.
Mr Jappie commented “Covid-19 has seen a shift across Australia’s car market with more local travel, social distancing rules and reduced new car stock coming into the country. Newer used cars are scarce and as a result we have been seeing an increase in customers looking for finance before they look for a car empowering them to secure a car quickly when they do go to market.”
Joining EVP as investors in CarClarity’s funding round are senior executives and employees of Prospa, Harmoney and Uno Home Loans. Raj Bhat, a senior executive at Prospa and a former Partner at KPMG will join CarClarity’s board following the transaction.
Since launching, CarClarity has quickly established itself as a reputable leader in the car financing space, securing more than $8 million in financing with a 98% approval rate for its customers. The business has seen over 8000 customers use its technology to compare matched lending options.