What is unit stocking finance? The complete guide
Unit stocking finance, also known as stock funding, is a type of credit available to registered motor traders. It lets you fund vehicles to stock in your dealership with little to no initial outlay.
We'll talk you through how it works and what the benefits are, so you can decide if unit stocking finance is right for you.
Register for Auction4Cars or login to your account to start bidding on a huge range of trade-only auctions. All vehicles are available with a wide selection of stock financing options.
What is unit stocking finance?
Unit stocking finance lets you use credit to finance vehicles or 'units' for your dealership's stock. You can usually finance several vehicles at a time to build out your inventory. In addition, you can use unit stocking finance for part-exchange purchases or buying vehicles from third-party trade suppliers.
There are several benefits to unit stocking finance, which we'll cover in more detail below, but the key advantage is avoiding having all your cash tied up in your stock. Spending less on stock means more free funds to grow your dealership. Generally speaking, the faster you can sell the cars, the less interest you'll pay on the finance facility.
How does unit stock financing work?
Unit stock finance is arranged between you – a registered member of the motor trade – and a finance provider, usually a financial institution or car manufacturer. Car dealers can source vehicles to stock from a range of providers such as auction houses or third-party trade-to-trade platforms. Once you've found the vehicle or vehicles you want to buy, you can arrange to pay for all or part of the purchase with unit stocking finance.
Auction4Cars gives you a choice of finance providers when arranging unit stocking finance. This lets you compare their financing options to find the best fit for your business. Some providers, including those partnered with Auction4Cars, will let you roll any VAT, fees or delivery costs into your finance package, so you can get stock on your forecourt faster with no initial outlay.
What are the benefits of unit stock finance?
The main benefits of unit stock finance are:
- More buying power – financing stock means you can release extra funds to purchase even more inventory
- Scale your dealership faster – more free cash means you can spend more in other areas beyond growing inventory to help your business grow quicker
- Rapid payments – most finance providers will make your funds available the same day, while some will deliver the money to your account within an hour
- Use finance to fully fund stock purchases – your stocking finance agreement can cover costs beyond the vehicle price including VAT, delivery costs and any extra fees
- Additional promotions – providers may run promotional periods with reduced interest that can help cut your overall financing costs
How much does unit stock financing cost?
The final price paid for unit stock depends on a range of factors. These include the rate set by the finance provider, the vehicle's make and model, how long you took to sell it, and your dealership's credit rating. Be aware that some unit stocking providers have the option to finance all or part of a vehicle's value, so make sure you check the terms and conditions before signing.
You might also have to pay a 'load fee' to the finance provider. This is simply a fee in exchange for providing the finance facility – similar to an admin fee. It's worth keeping this fee in mind because financing many cars can quickly see these fees build up.
Who provides unit stocking finance?
Unit stocking finance is provided by a range of third-party companies. The most common providers are financial institutions like banks, or car manufacturers themselves if you're looking to finance new cars for your dealership.
If you want to purchase vehicles on finance through Auction4Cars, we have several finance providers directly integrated into the purchase journey so you can choose the one that works best for you. Our partners are V12 Vehicle Finance, LE Capital, MotoNovo and NextGear.
Finance vehicles from Auction4Cars
Register for Auction4Cars or login to your account to browse our selection of used car auctions. All auction vehicles are available with stock financing from our selection of finance partners.