Motor trade finance for garages and dealers

In the motor trade, cash goes out long before it comes back. A dealer pays for a car at auction, spends on preparation and then waits for a buyer, while a workshop buys parts and pays technicians before customers settle their bills.

Trading is often uneven through the year. Many dealers see busier periods around the March and September registration plate changes, and quieter weeks can leave money tied up in stock. Workshops that service fleet or trade accounts may wait 30 days or more for payment, unlike retail customers who pay on collection.

Match the finance to what you are funding: stock that turns over quickly needs a revolving facility, while equipment and vehicles kept for years suit fixed-term asset finance.

• Forecourt stock: stock finance and stocking plans fund vehicles you buy to sell, repaid as each one is sold.
• Lifts, diagnostics and EV equipment: equipment leasing spreads the cost, or business hire purchase lets the company own the kit once the final payment is made.
• Recovery trucks, vans and courtesy cars: vehicle and fleet finance funds vehicles your business uses, rather than vehicles you sell.
• Cash tied up in owned equipment: asset refinance can release funds from recovery vehicles or workshop kit you already own.
• Fleet and trade customers on terms: invoice finance can advance cash against invoices to business customers.
• Refits, VAT bills and general needs: working capital finance covers costs that are not tied to one asset.

We arrange finance for your business only. We do not arrange finance for your customers' car purchases.

Lenders want to see that stock sells steadily and at a profit, and that the business keeps good records. Common points include:

• How quickly stock turns, and how much has been unsold for a long time
• Gross profit per vehicle after preparation costs
• How you value part exchanges and buy at auction
• Your record with any existing stocking plan, including audit results
• For workshops, the mix of retail, fleet and warranty work, and how quickly accounts pay
• The age and condition of any vehicles or equipment being financed or refinanced

Because many stocking plans charge interest daily, the cost of a vehicle grows the longer it sits unsold. A simple example shows why stock turn matters.

Illustrative example only: actual costs depend on the lender and your circumstances. A dealer funds a £10,000 car through a stocking plan charging £5 a day. If the car sells after 40 days, the interest is £200. If it takes 120 days, the interest is £600, three times as much, before any other fees.

Beyond your stock book and accounts, these extra items often help:

• Recent VAT returns and an aged debtor list for trade accounts
• Supplier quotes or invoices for equipment or vehicles
• Details of any current stocking plan, including limits and recent audits
• A list of owned vehicles and equipment if you are looking at refinance

• Set a clear rule for when to reduce the price of ageing stock, so finance charges do not eat the margin.
• Check stocking plan terms on audits, repayment deadlines after sale and charges for vehicles held past a set period.
• Plan equipment upgrades, such as EV servicing kit, before demand arrives rather than turning work away.
• Remember that financed vehicles and equipment can be repossessed if payments are missed, and directors are often asked for personal guarantees.

Welcome Finance is a commercial finance broker, not a lender. We work with limited companies, LLPs and partnerships of four or more partners in the motor trade.

You get a dedicated relationship manager by phone, email and chat, from first enquiry until the lender pays out. We check eligibility in about 60 seconds without affecting your credit score, and lenders on our panel run their own checks only if you choose to apply.

We charge you no fee. The lender pays us a commission on completion. You can ask the amount, and it can differ between lenders. Read how we are paid.

Can a stocking plan fund vehicles bought at auction?

Often, yes. Many stocking plans fund auction and trade purchases, although each lender sets its own rules on vehicle age, value and how quickly funds are released.

What happens if a stocked vehicle does not sell?

Plans usually set a maximum period a vehicle can stay funded. After that, you may need to repay the advance or pay extra charges, even if the car is still on the forecourt.

Is motor trade finance regulated?

Finance for limited companies, LLPs and partnerships of four or more partners is generally unregulated, and Consumer Credit Act protections generally do not apply. Read agreements carefully and take advice if unsure.

Can a garage finance used equipment?

Some lenders will finance used workshop equipment, depending on its age, condition and resale value. Newer, well-known brands are usually easier to fund.