Fintech startup MotoRefi has received $10 million from investors to aid the company’s growth, which points to the opportunity digital refinance holds for the auto finance industry.
The Arlington, Va.-based refinance fintech recently announced its second round of series A funding, led by Moderne Ventures, an early stage venture capital fund. Another round of Series A funding, which was finalized in February 2020, garnered $9.4 million for MotoRefi and was led by Accomplice and Link Ventures, according to the company. The fintech has raised more than $20 million so far.
The funding will enable MotoRefi to invest in the platform, add new team members, and expand the fintech’s presence in the auto refinance market, Chief Executive Kevin Bennett said. The investments come at a time when more Americans are applying to refinance their car loans, up 16% in 2020 compared with 2019, according to the RateGenius State of Auto Refinancing 2021 report. The report analyzed more than 1 million auto loan refinance applications from 2019-2020.
Founded in 2017, MotoRefi connects consumers seeking to refinance their car loans with auto lenders through a digital application and approval process that takes just minutes, Bennett told Auto Finance News. Once consumers are matched with the best refinance offer available to them, the fintech originates the loan and completes all documentation before the lender adds the loan to its balance sheet, he added.
The company, which works primarily with credit unions as well as community banks and other financiers, facilitated more than $250 million in auto refinance loans last year, Bennett said. In 2020, MotoRefi doubled the number of lenders on its platform and increased its revenue by six times, according to a company statement. Bennet did not specify which lenders, or how many, use the platform.
“We’re bringing those customers into that funnel and giving them that digital experience, making it more efficient for the customer and more efficient and cheaper for the lender, then handing off a happy customer and a fully compliant loan,” Bennett said.
Refinance is a growing sector of the auto finance industry as more customers look to bank online and capitalize on low interest rates to save money. According to RateGenius, about 17% more borrowers were able to refinance their vehicle loans in 2020 than the prior year, which benefited refinance fintechs.
RefiJet, for one, has experienced a 36% spike in applications on its digital platform since March, and expects to increase the number of loans facilitated on the platform per month to 2,500 in the fourth quarter, from about 1,800 last month. Austin-based refinance fintech Gravity Lending, too, logged a 400% month-to-month increase in originations in July 2020 to $16 million.
Meanwhile, Moderne Ventures partner Liza Benson will join the MotoRefi Board of Directors as part of the recent funding deal. “I couldn’t be more excited about MotoRefi’s trajectory and the team they’ve built,” Benson said. “They are revolutionizing the auto finance space for consumer auto, a $1.2 trillion market, and are the unequaled tech leader in this largely untapped space.”
Auto Finance Innovation Summit, the premier event for technology in auto finance, returns March 16-17, 2021, as a virtual experience. The virtual experience will offer the quality networking and education of past events, all through an online platform. To learn more about the 2021 event and register, visit www.AutoFinanceInnovation.com.