Planet42 Raises $100M to Expand Rent-to-Own Car Fleet

Rent-to-own car startup Planet42 hopes to add to its fleet after raising $100 million.

The South African company also hopes to use the capital to reach its goal of providing 1 million cars and to further its recent expansion into Mexico, the startup said in a news release provided to PYMNTS Wednesday (Feb. 22).

The round was led by South African multinational Naspers, the second time the company has backed Planet42, which provides a rent-to-own subscription service for people who can’t otherwise afford cars.

“Safe and reliable transport is a key driver of social and economic inclusion in emerging economies,” Co-founder and CEO Eerik Oja said in the release. “It enables people to access opportunities like jobs, education and public services more easily when public transport is often unreliable, painfully slow, unsafe — and usually all those things at once.”

Speaking to PYMNTS last year, Oja illustrated what he calls the unfairness of the situation like this: Imagine there’s a teacher who earns enough to afford a car loan but has been blacklisted by banks because they missed a monthly payment for their satellite TV subscription four years earlier.

It’s an absurd lending strategy, Oja argued, one made worse as banks increasingly adopt a conservative lending approach, leading them to reject up to 90% of the car loan financing applications they receive.

“There are millions of people who three years ago would have been able to get bank loans to [buy] a car but can’t anymore,” Oja said.

He told PYMNTS his company hopes to close this mobility gap via a tech-driven approach and alternative data sets to make fairer, faster and more affordable decisions about credit, allowing customers, who would have been ignored by banks, to get vehicle financing for the first time.

South Africa is not alone in the problem Oja described, he said in the release, explaining the company chose Mexico because it has “a large population of underbanked working people struggling with transport inequality.”

PYMNTS reported last year that there are a number of companies in the Middle East and Africa working to digitize the car buying and financing process.

In addition to Planet42, there’s also Moove, a Nigerian firm that finances drivers’ vehicle purchases and then automatically collects revenue-based repayments from their earnings through a partnership with Uber.

In the latest expansion of that collaboration, Moove is promoting its rent-to-buy service to Uber drivers in London to help them finance new electric vehicles as the ride-hailing firm attempts to fully electrify its platform in the city.

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