Carzumer is slated for launch before yearend, said Ward Ozaeta, the startup’s founder and chief executive, and the company is prepared to pivot its hybrid lending model — should market conditions warrant change — in the wake of the the Supreme Court decision to uphold Madden v. Midland Funding LLC.
The Carlsbad, Calif.-based direct-to-consumer auto finance provider and car-buying platform will operate on a hybrid lending model, with its pending California lending license to allow the company to originate loans in California, and a banking partner to allow Carzumer to originate loans in other states, Ozaeta said.
“Right now, we are testing things in the backend and working to put together a proposal for a partner that’s interested in working with us to implement the finance program,” he added, but declined to comment on the bank partner’s name.
“Putting together a lending platform can be tedious work,” Ozaeta added. “Everything has to come together and the stars have to align to make it work. There have been bumps in the road, and with that, setbacks. So we’ve had to adjust to figure out how to get to the finish line before year’ end.”
However, the startup’s hybrid lending model could prove problematic, given the Supreme Court’s recent denial of the petition to review the Madden v. Midland Funding LLC case. The rejection by the Supreme Court may prevent marketplace lenders that use bank partners from bypassing usury laws when originating loans.
“I think, eventually, if a bank partner situation proves to be more challenging and difficult, then it may be necessary to obtain a [lending] license in each state,” Ozaeta said. “If market conditions prevent the model that’s in place for the typical marketplace platform, then we will just pivot and maintain a holding pattern until that works itself out,” he added.