Building for the future: Myths about stock funding

In the modern world, information moves at incredible speeds. That’s as true for social media and the internet as it is for word of mouth. It’s little wonder then that there is so much misinformation out there.  

The automotive industry arguably has its fair share of fake news, and the area of wholesale stock funding is no exception – where myths spread easier than butter left out on a summer’s day.    

With that in mind, at NextGear Capital we thought we’d take the time to look at four of the most common myths in stock funding and reveal why they’re far from accurate.  

Stock Funding Myth #1: “It’s too expensive” 

The NextGear Capital team often speak to dealers who are rightly concerned that they are using their capital in the right way and running, as it were, a tight ship. Some may think that stock funding is too costly. The question is “more expensive than what and in what way?”. More than your own capital? Yes. More than other more traditional forms of credit? That’s highly debatable and our Account Managers can explain why.  

In truth, stock funding can’t rightly be compared to ordinary cash or traditional credit. You’re not comparing “apples with apples”. It’s a carefully crafted funding product, an investment in your future success, that includes the bonus of benefitting from industry expertise and connections that NextGear Capital has in spades.   

It’s an opportunity to grow the bottom line. The fact is the cost of stock funding is not as much as you might think and the one thing you should keep in mind is that it’s all relative. A NextGear Capital Stocking Plan allows you to replace sold vehicles faster, evolve your stock profile or simply stock more, creating the opportunity for additional profit without compromising your cash flow. For many, that’s money well spent. 

Stock Funding Myth #2: “It’s too restrictive”   

This is one of the biggest untruths doing the rounds, i.e. that a funding plan means you’ll have a limited choice in terms of where you can source stock. But that myth is blown out of the water by the fact that there’s no built-in exclusivity about where you buy, so you have greater peace of mind to source stock from the places you choose. 

What’s more, NextGear Capital has more than 70 auction and wholesale partners that accept payments direct making it quicker and easier to fund vehicles. 

The choice dealers get, in fact, is therefore exhaustive. For that reason, dealers (who need to stay agile in a highly competitive industry) will have a huge advantage if they are able to fund stock from almost any source when the right vehicle comes along.  
 
This is what sets NextGear Capital apart from traditional bank lenders and captive funders, i.e., it’s not too restrictive, in fact our Stocking Plans mean greater peace of mind, allowing you to source stock from the places you know and a huge range of suppliers you might not. 

Stock Funding Myth #3: “It’s only for failing dealers” 

Nothing could be further from the truth. For many of our customers, we’re not a last resort but the first port of call, especially for those that want to grow their business. Stock funding isn’t a mere safety line and most of the dealers we help are already very successful. 

A Stocking Plan does two things. Firstly, it gives a dealer the ability to increase the number of vehicles they have to offer and that can fuel growth. A number of dealers who’ve partnered with us have started selling up to 30% more vehicles than before. Secondly, it frees up cash to invest in other ways, whether in facilities, marketing or staff numbers. The result can have a transformational effect on a dealer’s business. NextGear Capital has worked with dealers of all shapes, sizes and ages to unlock their ambition and grow their businesses.  

Stock Funding Myth #4: “It’s complicated” 

It can’t be denied that some think stock funding is complicated. But the truth of the matter would, arguably, come as something of a surprise to those people. 

We provide funding that allows dealers to purchase vehicles and grow their business – it’s as simple as that. Another myth that typically piggybacks the sinister-sounding principal of the ‘captives’ i.e., that if you take funding from NextGear Capital, there’s going to be some other requirement attached to that funding. In truth, there’s no caveat other than dealers must use it on a pay-as-you-go basis to fund used cars, motorbikes or commercial vehicles.  

Those are just some of the myths of stock funding. But if you’d like to find out more, why not Book an appointment with one of our Account Managers.

Trusted by 1,700+ dealers 

NextGear Capital Stocking Plans are tailored for the specific needs of dealers. We take our responsibility seriously and have an experienced team who’ll work with you to understand your business and determine a facility that’s appropriate. Plus, we stay very close to you and adjust your plan as your needs evolve. 

*100% of the hammer price plus auction and delivery fees (auction purchases), or lower of CAP clean/invoice price (trade vehicles) + VAT funded on LCVs and qualifying vehicles up to the value of £45,000. Stocking Plus can only be used for trade sourced vehicles.