Reginald Larry-Cole, founder and chief executive of Buy2LetCars, explains why his car leasing investment firm is not peer-to-peer lending; it’s people funding people…
Buy2Let Cars is not a peer-to-peer platform. It is “peer-to business-to-peer”, with Buy2LetCars acting as the middleman between lessees who need cars, and investors who want inflation-beating returns.
This is an important distinction for founder and chief executive Reginald Larry-Cole to make. Founded by Larry-Cole in the wake of the financial crisis, the aim of Buy2LetCars has always been to simplify the car leasing process by helping key and essential workers who otherwise could not access mainstream leasing companies, even though they are gainfully employed with a proven disposable income.
They do this by offering lessees a market-leading solution which is itself funded by UK-wide investors. These key workers represent an underserved yet robust segment of the population, says Larry-Cole. Their employment is secure, even during a financial crisis or a global pandemic; but a blip on their file could exclude them from some of the more mainstream car leasing deals.
They are – in Larry-Cole’s words – “in that financial monotone zone”, and that makes them highly attractive lessees. “If the banks don’t loan you money it’s because a computer has decided you do not meet their criteria,” he explains. “Where we differ is that we use both computer and manual underwriting to assess affordability and need.
“Our cars operate like a pay-as-you-go mobile phone. Each car has a device in it that links to the start-up of the car. If you don’t pay your bill, it gives you a few days warning, saying that your account is in arrears, please call your lease provider. If you don’t pay, the next time you turn off your ignition, the car will simply not start again.”
This device is completely safe to use, and it ensures that the car cannot be driven after a missed payment. “Our incentive is not to put someone into one of our cars just because they have a credit challenge,” says Larry-Cole. “We turn down a lot more applications than we give. We do everything we can from day one to put the right person in the right car.
“Ultimately, we want that person to see out the lease. If their circumstances change long term, we will have that car back within 14 days, and during those 14 days we know it won’t have been driven. We get it back, get it checked and get it back into a good revenue situation.” Buy2LetCars has followed this formula for eight years, with a zero per cent default rate to its funders and returns which range from seven to 11 per cent IRR.
Their funders have rated the business five stars on both Trustpilot and Google. These funders are “anyone with the required capital who is fed up with low interest rates and would benefit from a fixed monthly return over a fixed term,” Larry-Cole explains.
Since the coronavirus pandemic began, Larry-Cole has seen an influx of enquiries from NHS staff and other key workers who need access to reliable vehicles so that they can remain safe during their commute and continue to provide front-line services. High lessee demand means there are plenty of new and ongoing opportunities for investors who have been frustrated by low savings rates and stock market volatility.
“We can help you grow your money,” says Larry-Cole. “Just as we have done over the last eight years. But you would also be helping today’s essential workers to go about their business. “Buy2LetCars is car leasing funded by people for people.”