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The funding announcement comes after a year of gains for the four-year-old company, CEO Kevin Bennett tells ARLnow. In 2020, MotoRefi — based at 1010 N. Glebe Road in Ballston — raised $9.4 million, saw the number of users on its platform double and saw its revenue grow six times over. It facilitated over $250 million in auto refinancings and brought on an additional 100 employees.
(Bennett said MotoRefi does not release the number of users.)
The company, which was created by a team of venture-builders from Alexandria-based QED Investors, matches drivers looking to refinance their auto loans with credit unions and community banks. Bennett, who has worked on four other D.C.-area startups, said QED Investors co-founder and managing partner Nigel Morris asked him to lead the fledgling startup.
“Most consumers don’t know they can refinance their cars,” he said, contrasting it with a more commonly-understood home refinancing. “Only 47% know they can refinance their car and 2 to 3% do it.”
And unlike refinancing a home and or some student loans, where online platforms such as Rocket Mortgage and SoFi have made the process easier and more transparent, Bennett said this part of the market has not had its “Rocket Mortgage moment.” MotoRefi changes that, he said.
“People rightly don’t see the process as laid-out fairly,” he said. “One of the things that’s attractive about this startup is that it has a real very specific impact on people’s lives. We see the results of our work every day and that’s incredibly motivating.”
The startup handles the refinancing process from soup to nuts, checking credit scores and matching users only with the rates from banks and credit unions that they qualify for, Bennett said. The average customer saves about $100 a month.
For the smaller credit unions and banks that MotoRefi partners with, Bennett said the startup provides them access to customers they would not otherwise be able to reach. The startup also smoothes out the onboarding of new customers by streamlining the process of gathering documents and matching people with companies based on whether they would be approved, he said.
“We’re more efficient than our competitors because we’re the first real tech company in the space,” he said. “Our approval rates are higher, and it’s much less work for that credit union to review and fund a loan since we’re only sending customers who we know are a match.”
MotoRefi’s revenue comes from a number of different streams, Bennett said. The startup charges customers a processing fee in their loan and lenders pay MotoRefi for access to the people seeking loans, he said. The company also sells car-related services like a gap warranty.
Photo courtesy MotoRefi