What is car stocking finance?

This month we are providing a spotlight on car stocking finance. So, to begin with let’s explore what it is.

Car stocking finance is a specialist form of lending that has been created for companies that operate in the automotive industry. In particular, it is extremely beneficial for car and van dealerships.

There are several ways in which it can work:

Stock acquisition – a dealership will need to purchase stock from manufacturers or wholesalers to keep their showroom full. Understandably this will require significant capital investment. By using car stocking finance, a dealership can access funding to proceed with increasing their inventory and in turn offering their customers a much larger selection of vehicles to choose from.

Flexible financing – Keeping a healthy level of capital is crucial to the success of any dealership. Having access to a flexible finance solution is extremely advantageous. Finance terms can be varied depending on the specific need of the dealership and the number of vehicles that are required.

Inventory management – a dealership needs to be proactive and adaptable with the management of their inventory. This will all depend on market demand so being able to rotate stock, introduce new models and keep up with latest trends is important. It is also a necessity that this is all done without negatively affecting cash reserves.

Repayments – fortunately for the dealership, the repayment on stocking finance is highly favourable. The debt will only have to be repaid once a vehicle has been sold. This means it can fully align with the demands of a dealerships cashflow and its turnover on inventory, making it extremely easy to quickly replenish their stock.

Relationships – a successful dealership is built on the strong relationships that it builds. Using stocking finance, a dealership builds positive relationships with a manufacturer. The manufacturer knows that it can rely on the dealership to do their very best to sell their vehicles and fulfil their payment obligations on time. This in turn will lead to preferential treatment, excellent customer support and access to exclusive offers or vehicle types.

So, to summarise car stocking finance is highly beneficial in what is a very competitive market. A dealership can effectively manage their stock, optimise their cash flow and fulfil their growth plans.

If you have any questions on car stocking finance, then the NGI team are on hand to help. For more information, please call us on 01993 706403 or e-mail enquiries@ngifinance.co.uk.