Account manager and dealer looking at a phone

As an independent used car dealer, you may have heard the term unit stocking finance, but maybe you've not quite taken the leap to use it yet and need some guidance with this type of car finance and the finance agreement itself.


Don't worry; we're here to explain everything you need to know regarding unit stocking finance agreements and what to look for.

Firstly, what is unit stocking finance?

Unit stocking finance, sometimes termed as stock finance, stocking loans or stock funding, is a credit facility provided by specialist finance providers like V12 Vehicle Finance that allows car dealers to purchase the stock they want for their forecourts.

This type of finance is great for used car dealers looking to grow their business or preserve their cash flow. It allows for purchasing stock like cars and vans from auction houses. It can be used to fund part-exchanges or trade-to-trade purchases on funding, freeing up cash for things like website upgrades, buying your existing site, or simply selling more cars.

An account manager and a dealer looking at a phone smiling

What should you look for in your unit stocking finance agreement?

Whilst unit stocking finance is fairly straightforward, not all agreements are the same, so there are certain things you should look out for.

  1. Load Fees

You can usually expect a load fee within a unit stocking finance agreement. The load fee is a fee that you pay when you buy a vehicle using your unit stocking finance facility and covers the cost of 'loading' the vehicle onto the provider's system. It's important to note that this fee can vary drastically across different finance companies. In some cases, you could be charged a fee for settling a vehicle.

At V12 Vehicle Finance, we don't charge dealers settlement fees, and we also give dealers the option to settle vehicles across multiple payment methods, such as Faster Payment or Direct Debit.

  1. Funding terms

Another important aspect of unit stocking finance agreements is the funding terms and how the particular stock finance loan works.

Funding terms will differ across finance providers, and a common misconception is that unit stocking finance can only be used to cover a percentage of the hammer price of the car. This is not true, as at V12 Vehicle Finance, our product covers 100% of the hammer price at auction and can be used to cover auction houses' fees, delivery fees, VAT and even refurbishment fees.

Also, look at vehicles your unit stocking facility allows you to buy. Some agreements may stipulate that you cannot use the loan to purchase LCVs or WAVs, for instance, but in V12 Vehicle Finance's case, our unit stocking finance allows you to purchase light commercial vehicles with a single unit ceiling value limit of £65,000.

  1. Payment terms

Of course, a crucial element of any unit stocking finance agreement is how you will repay the credit you borrow. Again, different finance providers will have their own payment terms for car dealers to adhere to. Some finance providers will charge a set amount of interest on the entire value of the unit stocking facility you take out, regardless of whether you use the entire facility or not.

At V12 Vehicle Finance, we only charge interest on the amount you borrow - so it works like a credit card. This means that as a car dealer, it gives you much more flexibility and control, rather than having to use the entire facility and perhaps purchasing cars you may not otherwise have. We also have 120-day payment terms with the option to extend to 150 days.

  1. Auction Houses

When evaluating your unit stocking finance agreement with your chosen finance lender, ensure you understand where you can use your facility. V12 Vehicle Finance does not dictate where you purchase your vehicles, so you can purchase your vehicles from any auction house across the country or other sources. Other finance providers may state that you can only use their unit stocking finance facility with their approved auction partners, which limits your options.

As well as not limiting your options, at V12 Vehicle Finance, we work with a large number of auction partners across the country to give you access to exclusive offers and benefits. These could include up to 30-day interest-free periods, reduced load fees or covering your auction and delivery fees.

Our unit stocking finance facility is also typically integrated with our preferred auction partners, making the purchasing experience seamless and quick - this means you can get your vehicles loaded and on sale much faster.

  1. Audit requirements

A final point to check on your finance agreement with your provider is the provider's audit requirements. Once you have purchased your chosen vehicles, the lender will typically perform a monthly physical audit of your dealership to check your stock. Auditors may turn up without prior notice, so remember that this can be potentially disruptive.

V12 Vehicle Finance gives you more flexibility, with the option to self-audit your stock using our digital platform. You can undertake your audit at a time that suits you and upload the necessary evidence for your stock in a few simple clicks straight from your smartphone. If digital auditing isn't for you, we still offer some lighter-touch forms of a physical audit as we look to give dealers the flexibility needed so the focus remains on buying and selling vehicles.

So that's it, some key points to be aware of when reviewing your unit stocking finance agreements. If you are considering this type of finance for your car dealership, we are happy to help. Contact us to see if you are eligible for stock finance, or head to our unit stocking finance product page to find out more.

Find out more about our unit stocking finance here