Embedded Insurance Streamlines Auto Refinancing Experience for Consumers

In the markets for new and used cars, costs are up and discounts are down. On the recent Black Friday, discounts were at record lows. Today, the average price of a new car is $40,000 and a used one is $25,000.

At the same time, consumers are often overpaying for financing and insurance on these vehicles. They take the financing they are offered at the dealership, stick with an insurance policy they’ve chosen and don’t shop around.

“Your car is an asset, but it often feels like a liability,” Kevin Bennett, CEO of Caribou, told PYMNTS when sharing this information. “It costs you about $10,000 a year to own a car.”

Bundling Auto Refinancing and Insurance

Caribou helps consumers find better deals with a platform that provides a streamlined shopping experience for auto refinancing and, in a recent addition, bundled auto insurance. With both offers, Caribou aggregates offers from different companies and matches the customer with the best one.

The company announced the addition of the auto insurance offering in October. On the auto refinancing front, it announced a partnership with Uber in November and is now rolling out a program offering drivers and couriers instant auto loan refinancing. These moves follow a Series B funding round announced in May that raised $45 million for the FinTech, which was then known as MotoRefi.

Read more: Auto Refinance Platform MotoRefi Raises $45M in Goldman-Led Series B

As Caribou’s existing customers were asking how else the company could save them money — and as financing and insurance are the two biggest components of the cost of ownership of a vehicle — the company decided to bundle the two. Now, customers can shop for both at the same time.

“Auto insurance is actually another way we can help them save money,” Bennett said. “It’s top of mind, as they’re already sharing their vehicle information and saying, ‘Help me save money however you can,’ and auto insurance was a natural extension.”

With auto insurance, he said, consumers generally compare options when it is top of mind — such as when they buy a car or add someone to the policy — but then stick with the same carrier for years because they get busy with their lives and the policy auto-renews. Over time, the price of that policy goes up.

“It turns out they can actually get a much better deal, and we actually make it a lot easier to get that better deal and save money on their auto insurance, very similar to how we do it with auto loans,” Bennett said.

Partnering With Others in the Ecosystem

In the partnership with Uber, which will first launch in California and then expand into other states, the Uber Pro app will provide direct access to Caribou. A similar partnership is in place with the student loan refinance platform SoFi.

“We’ve started, generally speaking, partnering with others in the ecosystem and helping them better serve their customers,” Bennett said.

In the case of Uber drivers, owning a car is the largest fixed cost in their participation in the gig economy. What’s more, they’re coping with not only the rising cost of cars, but also the cost of gas and other goods. Caribou offers a convenient way to shop for better deals.

“An Uber driver could apply between rides,” Bennett explained. “They’re in the car, they’ve dropped someone off, they’ve got their license and registration, they’ve got the app, and they can see offers in seconds and lock in a rate. So, we saw it as not just a huge value, but something that would be convenient for Uber drivers as well.”

Improving Consumers’ Relationships With Their Cars

Looking ahead, Bennett noted that beyond the current inflation, there are longer-term trends driving up the cost of cars. The increasing amount of technology in vehicles, for example, makes them more valuable and more expensive.

“I think it’s good in terms of the lifetime of the vehicle, but it really is becoming a larger expense in the lives of consumers,” he noted. “So, as it really becomes material to their personal finances and what that looks like, we’re thrilled to be able to help them save money.”

He added that Caribou has crossed a billion dollars in loans refinanced, has saved consumers $70 million in interest and has grown from a team of 40 people at the start of the pandemic to 400 people today. One key to its success has been expanding awareness of the category by teaching consumers that they can save money by refinancing their cars.

“We really want to help consumers improve their financial relationships with their cars and improve their financial lives generally,” Bennett said.