Superfast stocking finance that lets you focus on growing your dealership
LE Capital is a specialist stocking finance company offering superfast, hassle-free stock funding to independent and franchise car dealerships across the UK. We have funded over £500m vehicles, and bring a wealth of finance expertise to help dealerships grow. Our unit stock finance makes it easy for you to manage your cashflow and maximises cash availability, which means you can focus on selling cars.
Want to find out more, contact our team by phone or email. If you are ready to get started, you can apply now.
What is stocking finance?
Stocking finance, also known as stock funding or unit stocking, is a loan given to dealerships relating to its vehicle stock. As opposed to other finance, it is specifically designed for dealerships buying and selling vehicles. The primary purpose of stock finance is to release cash tied up in stock and increase the number of vehicles on a dealership’s forecourt to increase revenue and profits.
Stocking finance can be in respect of vehicles, cars, vans, lorries, HGVs, trucks, agricultural vehicles, and other motorised vehicles. The amount of funding per vehicle is normally based on the trade value of each vehicle funded and often covers the initial costs of purchase (including auction and delivery fees).
Where can you get stock finance from and how do you choose?
You can obtain stock finance from a bank, independent finance company, auction house finance facility or a wholesale finance provider. However, it is important to do some research to see if the facility is right for you.
You must review providers and ensure they offer terms that will fit your business based on your stock profile, turnover days and existing sales model. Furthermore, you need to get to grips with how the product is priced to ensure the offer is competitive.
Dealers often look at the headline interest rate to determine what will make a good deal but forget to calculate the overall monthly charges relating to fees. The overall cost of unit stocking finance can often be greater for the fees when you add them together than the interest. Pricing is only one consideration when choosing your facility.
Stocking finance can be enormously helpful for your dealership but you need to understand the following:
- How easy is the product to use?
- How good is the provider’s customer services team and how quickly will they respond to queries?
- How intrusive will their stock auditing be?
- You should always go with a provider recommended by other dealers!
How will your stock finance facility work?
A stocking finance facility is a bit like an overdraft. Your provider will give you an approved credit limit, which may be £50,000, £100,000, or even a £1,000,000 + facility limit, and you can utilise what you need up to the limit to buy vehicles.
Some facility providers have no restriction on where the vehicles are purchased from or what type of vehicles are purchased, whereas some providers will require you to only purchase from certain auctions or approved vendors. After you obtain your facility you may then purchase vehicles with it or release cash from current stock.
When you sell a vehicle, your provider will require that you pay off the portion of the loan that was used to purchase that vehicle (terms for payment will differ depending on the provider). As an example, let’s say you purchase a vehicle at an auction for £10,000, then sell the vehicle the following week for £7,500. The provider would require you to pay £2,500, plus any applicable fees.
Providers will vary with the terms given for settling a vehicle and utilising the funds again. For example, when the vehicle that was sold in the previous example has been sold and settled, some providers will require a waiting period of 48 hours before you can spend that £7,500 again, and some providers have the funds available immediately to spend again once payment has been made.
If you don’t sell a vehicle within the permitted time offered by the finance house, which is normally 120-160 days, you are required to repay the whole amount or a proportion of the capital outstanding. It is vital you understand how capital repayments will work.
What is the process to get stock funding and how long does it take?
Before making an application for stocking finance, you should get together a full set of your latest filed financial statements, together with any available up-to-date MI and your current stocklist.
As a business owner you will normally be required to offer a personal guarantee so you should also be ready to submit details of your personal financial situation.
Once you have chosen the right stock funding provider, you are ready to make an application.
Once you apply, the provider will review all of the information submitted and run credit checks on the business and the business owners.
To qualify for credit facilities, the dealership needs to have a good credit history to demonstrate to the funder that a new credit line is appropriate and help them assess the size of the facility. Low credit scores and some adverse marks on a credit history won’t always prevent an individual from obtaining a facility, but it will limit the amount of capital a lender is willing to give to a particular dealer and at what rate.
Following any necessary follow up questions, a decision can be given within 5 days depending upon the funder’s internal processes.
How stocking finance works at LE Capital
Getting an approval
After you have submitted a full application, we should get you a decision within 3 days and we can have your account up and running within a week.
Setting you up
Once live, we will give you a welcome call and discuss where you buy from so we can set up LE Capital buyer accounts on your behalf with major UK auction houses and other wholesale vendors. Find out more about our auction partners.
You can either fund your own stock or request purchases to be made directly to our approved vendors. Funding requests are actioned the same day of a request.
You can manage your account through our customer portal and track stock payment dates and values. You will also receive update emails daily so you can keep up-to-date with your account.
Speaking to our team
You will be allocated a specific account manager who can handle all your queries by phone and over email.
Why choose LE Capital for your stock funding
We ensure cash is paid the same day as a request and can pay in one hour; allowing you to easily manage your cashflow and maximise cash availability.
Competitive rates and simple charging with interest payable monthly and no early capital repayments.
Flexibility to purchase in same day funds from mainstream auction houses, trade vendors and from own stock.
100% of invoices financed with all fees, delivery charges and vehicle costs included.
Vehicle stocked for up to 120 days with no early capital repayments and with refinancing for up to 240 days.
You will have a dedicated account manager for all your funding requests, as well as providing expert support to manage your account.
Stock Funding FAQs Answered
Where can I use my facility?
You can use your facility in major auction houses across the UK or set up other more bespoke wholesale vendor accounts. Our direct payments service aims to be the most flexible in the market.
What will I need to make an application and how quickly will I get an approval?
In order to make an application, all business owners and directors will need to complete credit search consents and personal Asset & Liability forms.
Furthermore, we will request a complete set of your latest filed financial statements, together with information in respect of your business bank account. We aim to turn around complete applications in three days.
How often do you take capital repayments?
Unlike other providers, we don’t take multiple capital repayments with further fee charges. You can stock a vehicle for 120 days without any capital repayments or any further fee charges.
How often will I be audited and what does an audit consist of?
While we get to know you and you get to know us, we may audit you more frequently. As we build a relationship, we are able to carry out more checks remotely. Remember that, while auditors are there to do a job, they also have a high level of insight in the current market conditions, so please feel free to speak to them.
How quickly can I add and remove vehicles from my facility?
We aim to process payments for your account, both in respect of adding and removing vehicles from your facility, same-day, in 1 hour.
Can I buy stock from auctions using stock finance?
Auction purchases are the most common source of purchase in this market. Most mainstream funders will allow auction purchases on their facilities.
Some facility providers may limit spending to certain auction houses. Independent funders, unconnected to auction houses, are very flexible and build good working relationships with all auction houses to support dealerships in buying from anywhere. Some providers will fund the invoice value when purchasing from auction including VAT, delivery fees and auction fees.
However, always check the terms within your contract because certain funders will have restrictions to CAP value regardless of purchase price at auction, which may well negatively affect your cashflow.
What if I have a question not covered here?
Our friendly professional team is here to help. Please contact our customer services team on 0116 502 0116.
“We discovered LE Capital in June 2022 and managed to secure a facility with them which instantly transformed our business. The facility is very easy to use and the customer service is excellent.
We recently had an increase in the facility which has once again led to an increase in stock levels and our first month’s sales have almost doubled. I have recommended LE Capital to many people and will continue to do so.”Club Class Cars York