Gone are the days when dealers relied on their own capital or regular bank lending to stock their forecourts. As competition has increased, business owners have looked for more flexible ways in which to fund a larger number of vehicles, in order to attract more customers. In today’s environment, with rapid stock turnover and huge competition for used vehicles, having the right finance solution in place is essential.
Auction houses have long provided finance to dealers buying vehicles through their channels and this remains a sound option for many, but as businesses look to other sources of vehicles (private sales for example) this option does not give the flexibility required.
There’s a wide range of stock funding options now available to dealers, including stocking loans (unsecured loans that can be used to purchase vehicles from any source) and unit stocking arrangements, where the lender has title to the vehicle until it is sold on. It’s the latter of that has become increasingly popular in recent years, as it allows dealers to manage cashflow and stock levels more efficiently by adding and removing vehicles from their funded portfolio at any time.
Many unit stocking plans look similar at first glance, so it’s worth taking the time to evaluate them properly to ensure that you’re getting the best deal – and that doesn’t necessarily mean just the lowest rate of interest. Here are some other questions to ask:
- What percentage of the vehicles value will the funder provide? Does this include VAT on qualifying vehicles?
- Does the funding cover all sources of vehicles including private sales, part exchange and trade-sourced stock?
- What period does the finance run for, 120, 150 days? What period best suits your average stock turnover?
- What stock management and reporting software does the funder provide?
- Does the funder offer market intelligence that could help in stock selection and sourcing?
Whatever type of finance works best for a particular group, maintaining the confidence of the lender is essential. Ensuring that stock inventory audits are frequent, accurate and provide the level of detailed information required by funding providers is central to this.
How CheckVentory can help
CheckVentory Audit’s cloud and app-based solution delivers a group-wide view of the whole vehicle inventory on a continual basis, while consolidating data-feeds from multiple sources to give a complete and validated appraisal of your portfolio.
This level of insight enables a more proactive approach to stock management; maximising sales opportunities and allowing better-informed management decisions. It also provides invaluable input for governance and compliance requirements, as well as helping to secure lines of credit by building greater trust and collaboration with funders.
To learn more about our services or schedule a demo please visit the CheckVentory Dealer Audit page here.