Flexible car subscriptions are the “Netflix of cars” - renting instead of buying a car seems to be the model of choice for a new generation of drivers. According to estimates, 20%-30% of new cars in 2025 will already be placed in the market per subscription. In Switzerland, the leading car subscription service Carify works with the lending platform Crowd4Cash and i2 group as a source of financing.
What led you to found Crowd4Cash?
I studied law and pursued a career in banking and consulting before founding Crowd4Cash in 2016. Crowdlending was a concept where I saw huge potential. This was the cornerstone for the creation of Crowd4Cash. The startup is bootstrapped. We don’t invest much in marketing and see that the differentiation in the crowdlending space is always difficult. Our strength is a very versatile IT platform that we have built ourselves. It allowed us to develop C4C Easy, a solution for merchants offering installment payments at the point of sale. We already work with more than 100 partners selling everything from furniture to hot tubs.
On Crowd4Cash private investors can also finance private loans, SME loans and mortgages. You have been working with i2 group as a refinancing partner for a while now.
Exactly. The collaboration between Crowd4Cash and i2 group is a good example of how two fintech startups with strong IT platforms work together. When we place a new loan on our platform and i2 group makes a bid, the corresponding transactions are fully automated. This end-to-end processing is efficient and means that there is no additional workload associated with this process on our side, an important point given that we only have just over five full time equivalents in the team. The same is true for reporting. Because i2 group’s software automatically gathers the reports via API, we don’t have to submit or edit any reports which in turn reduces our workload. This ease with which our two companies work together also convinced us to start the Carify project together.
Can you explain why Carify turned to you as a financing partner?
Carify offers end-clients hundreds of cars from over 400 garage partners in a subscription model. Unsold cars tie up a lot of capital from a garage’s perspective. By working with Carify and loaning out a car, a garage can free up money and receive up to 80% of the car's value as a loan from us. This model is a classic win-win-win arrangement for everyone involved. By working with Crowd4Cash, Carify can offer more cars, garages have a flexible solution for their liquidity needs and we can offer interesting loans to private investors and to the institutional investors who work with i2 group. And with the tight IT integration we have on both sides, at Carify and i2 group, the processes are highly automated.
Can you explain in more detail why a garage would be interested in renting out a car instead of just selling it?
Due to supply chain bottlenecks, garages currently have the problem that new cars are not available, even though customers have already disposed of their old cars (or would like to do so). Here, the rental experience offers several advantages. First, the time until the desired vehicle is available can be bridged. Furthermore, future car buyers can be convinced of the advantages of a new vehicle (later purchase). And last but not least, the garage can better capitalize the vehicle fleet. In the end, this gives the garage the opportunity to optimize its revenues.
And why does a younger generation increasingly opt for cars in a subscription model instead of buying or leasing a car?
It is an option with very high convenience, flexibility, and cost certainty. You pay a predefined monthly lump sum. It covers all costs associated with the car, including insurance, taxes, and maintenance. With a leasing contract, you pay a large penalty if you want to terminate the contract early. With a car subscription you can change models more frequently and resize to fit your needs. You can get everything from the VW Golf to the Porsche Cayenne. And by the way, speaking of a younger generation, it is important to know that the average age of people taking out a car subscription is about 40.
Still, subscriptions are a new model. Can they become more than a niche alternative to the established alternatives?
There is a clear trend and high growth rates, and the market has the potential to become big. We’re just starting with our first loans, but you can think of it like this: If we take an average price of 30’000 Francs and assume 10 cars by garage, and just the 400 garages that are already working with Carify, we’re already talking about a financing yolume of 120 million.
What risk do the investors who invest in these loans bear?
As the market develops, it will quickly reach a size that will be of interest to institutional investors. It is important to know that the end investors, whether they are active on our platform or invest through the i2 group, do not bear the risk of non-payment of the people that take out a subscription. They lend to the garages. Such an investment is attractive because the creditworthiness of the garages is solid, and they submit their financial statements every year. Since most of them are larger companies with sales over 6 million Francs, the loan amount is not disproportionately high for them. The loans are secured by the cars, and the cars can be easily sold on the second-hand market. The loan duration is short, usually 12 months, and the returns are quite attractive compared to the risk.
What is the worst-case scenario?
The worst case from an investor’s point of view would be that one of the garages goes bankrupt. That would mean that the cars from that garage would have to be sold to repay the loans. That is a manageable risk.
Crowd4Cash already offers different loan types on its platform. How important is this new project?
I am confident that this new type of loan, which is basically a secured SME loan, will be of interest to our investors. With i2 Group, we have a partner that ensures that the loans will be funded. It's an important example of the strength of fintech companies working together. Because the process is highly automated, we can build significant volume business despite low margins. Banks are not able to offer something like this. As I said earlier, this new type of loan has the potential to become big. Therefore, it is likely to attract institutional investors who are looking for solid interest rates with a very manageable risk in the fixed-interest area for larger sums.
