P2P lender Zopa has launched a car refinancing service to allow consumers to switch from existing car finance agreements to a Zopa hire purchase agreement, titled Zopa Car ReFi.

According to Marie Steinthaler, Zopa’s head of strategic expansion: "It [the product] is specifically for refinancing secured finance offerings; for example, hire purchase or conditional sale. It’s designed for people who want to own their car at the end, so perhaps not ideally suited for PCP’ers who like to upgrade to a new vehicle at the end of the term."

Zopa said research it conducted had found that customers often do not shop for the best deal while getting car finance, and instead were more focused on getting the car than researching the most suitable finance option.

In order to access Zopa Car ReFi, customers need to enter the car’s registration number, current mileage, his or her monthly payments, the number of months left on the loan and what any settlement figure would be.

If Zopa is able to offer a cheaper deal, it will provide a personal estimate for a loan secured against the vehicle. This process will not impact on credit scores.

Assuming the customer passes credit and affordability tests, Zopa will directly pay off the customer’s existing loan provider directly.

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Zopa will lend £1,000 to £25,000 for vehicles up to 10 years old, for periods of between one and five years. In order to verify vehicle details, Zopa said it would use data from independent suppliers and various sources, including HPI, and use CAP values alongside vehicle details to create an estimated value.

Ownership of the vehicle remains with Zopa’s Lenders until the final payment, when it will be transferred to the borrower. The borrowers will remain the registered keepers of the vehicle and Zopa does not take ownership of the vehicle at any point.

Jaidev Janardana, Zopa chief executive officer, said, "We are thrilled to launch the UK’s first seamless car refinancing service, helping thousands of consumers drive down the cost of car ownership. This is a market worth £12bn per year with plenty of space for customer-first innovation – something we have specialised in at Zopa for over 11 years.

"Buying a car is by far the most common reason for a customer to take a personal loan from Zopa, so we are proud to now also offer a product that can help customers that already have a car on a finance agreement. With an outstanding team and a deep understanding of technology, it is possible to combine longstanding history and credit excellence with lean, design-led innovation."

When asked if Zopa was considering expanding its hire purchase at point-of-sale, Steinthaler said: "we are always interested in speaking to like-minded partners who care about offering customers a great service, and our technology continues to evolve to allow for simple integration. We are working with a number of partners already to offer new ways of giving customers access to a Zopa loan through the partner’s journey.