Zopa is launching the UK’s first dedicated online car refinancing service.
The UK’s largest peer-to-peer lending platform Zopa is launching a new product by the name of Zopa Car ReFi. The service will allow borrowers to pay off more expensive car financing arrangements using a Zopa loan. Zopa’s credit risk algorithms, combined with in-depth vehicle information, will act together to provide customers with a free and instant personalised savings estimate, prior to those customers taking out the product. Zopa Car ReFi will only be available to those borrowers for whom it will save money.
The Car ReFi loans will be secured against the vehicle. The ownership of the vehicle will remain with Zopa’s lenders until the loan has been fully repaid, at which time ownership is transferred over to the borrower. The platform expects to make lending decisions for the new product within a couple of days, leaning heavily upon a seamless online application process.
Auto loans already account for a significant proportion of Zopa’s loan book, but the Car ReFi loans will add another string to its bow. Building out this package is all part of Zopa’s mission to dominate specific niches within consumer credit. Point-of-sale capacity is another key building block. The Car ReFi loans are powered by a “partnership API” – which plugs directly into the Zopa engine. That same API is currently in private beta with a number of strategic partners within the consumer finance space. The technology is pivotal to Zopa’s push into point-of-sale channels.
The used car financing market is worth an estimated £12bn a year in new agreements, in addition to billions of pounds of existing auto loan deals.
Zopa tells us that the new product will find its way into retail investment portfolios from day one. This marks the platform’s first foray into the secured consumer lending space. AltFi Data Analytics tells us that the entirety of Zopa’s lending to date has been comprised of unsecured consumer loans.
“We are thrilled to launch the UK’s first seamless car refinancing service, helping thousands of consumers drive down the cost of car ownership. This is a market worth £12bn per year with plenty of space for customer-first innovation – something we have specialised in at Zopa for over 11 years. Buying a car is by far the most common reason for a customer to take a personal loan from Zopa, so we are proud to now also offer a product that can help customers that already have a car on a finance agreement. With an outstanding team and a deep understanding of technology, it is possible to combine longstanding history and credit excellence with lean, design-led innovation.”