How unit stocking finance works for car dealerships

How unit stocking finance works for car dealerships

How does unit stocking finance work?

Application: Car dealerships apply for a pre-approved credit limit with stocking finance, with factors including credit score and overall financial performance determining what the credit limit will be.

Stock purchase: These funds are then used to buy vehicles from different areas, including direct from the manufacturer, or from an auction.  

Selling inventory: When a vehicle is sold, the dealership repays the amount that was borrowed to purchase a specific vehicle, along with any associated costs.

Reusing Funds: The funds that were repaid get made available again, enabling the dealership to purchase more vehicles, allowing them to maintain or grow their forecourt.  

How alternatives to stocking finance work?

Unsecured Business Loans

For an unsecured business loan, an application is sent where lenders evaluate factors including creditworthiness and overall financial stability to determine loan approval and terms. Once approved, the business receives a lump sum which can be used for various purposes, such as expanding operations, purchasing equipment, or covering short-term expenses.

The business repays the loan through scheduled instalments over an agreed period, including interest and any applicable fees. After the full repayment, the loan is finished, and if additional funding is required, the business must reapply for a new loan.

Revolving Credit Facility

For companies applying for a revolving credit facility, lenders will assess their financial health to establish a maximum credit limit available. Businesses will then be able to draw funds up to their approved limit as needed, using the credit for working capital, managing cash flow, or other expenses.

As the company repays borrowed amounts, the funds become immediately available again, allowing flexible access to capital without reapplying. This cycle of borrowing and repayment can continue throughout the life of the facility, providing an adaptable financial solution.

Apply for stocking finance or alternatives

MAF Finance Group can compare offers from a wide range of banks and alternative funders to provide tailored financial solutions.

If you would like to learn more or get a quote, fill out the form below and we will contact you. If you want to speak to us directly, call us on 0115 958 6872 and a member of our team will be happy to talk to you. Alternatively, email us at [email protected].