Stocking Finance and Asset Finance for Car Dealerships

Finance Assets arranges stocking finance and asset finance for UK car dealerships, helping independent used car dealers, franchised dealers, car supermarkets, and van and specialist dealers fund the vehicles on their forecourt and the workshop, preparation and showroom equipment behind them.

A stocking facility pays for the cars you buy at auction, from the trade or in part exchange, and you repay each car when it sells. It lets a dealer carry more stock than its own cash would allow, without tying up working capital in every vehicle on the forecourt.

Written by Marcus Wright, founder of Bolton Business Finance Ltd, in financial services since 2008 and a commercial finance broker since 2019. Last reviewed October 2026.

How stocking finance works

Stocking finance, also called floor plan or stock funding, is a revolving facility. Each vehicle is funded when you buy it and repaid when you sell it, which frees that part of the limit for the next purchase.

1. The lender agrees a facility limit. This is the most you can have drawn at any one time, often with a cap on the value of any single vehicle.
2. You buy a car. The lender pays the auction house or seller directly, or refunds you for a car you have already paid for, such as a part exchange.
3. The car sits on your forecourt. You pay interest on the amount drawn while it is in stock, usually monthly. The lender may hold the V5C logbook or take security over the vehicle.
4. You sell the car. You repay the amount funded for that car, usually within a few days of the sale.
5. The limit is free again. You can use it to buy the next vehicle.

Stocking finance funds the dealer’s own business. If you offer finance to your customers, that is a separate arrangement with a motor finance lender, and you need your own FCA permission to do it.

What stocking finance costs: a worked example

Because you pay interest for each day a car is funded, the cost depends mostly on how quickly you sell. A car funded at £15,000 at an interest rate of 10% a year costs about £4.11 a day to hold.

A car that sells in 30 days costs a quarter of the interest of one that takes 120 days. Add the lender’s fees, such as a charge per vehicle funded, to work out the full cost per car, and compare it with your margin on that car.

Curtailment and stock age

Lenders do not want to fund cars that are not selling, because their value falls the longer they sit. Most facilities have curtailment rules: if a car is still unsold after a set period, you repay part of what was funded, and more at later stages.

• When it starts. Often somewhere between 60 and 180 days, depending on the lender and the type of stock.
• How much. A percentage of the amount funded at each stage, until the car is either sold or fully repaid.
• Why it matters. Curtailment payments come out of your cash, so a forecourt full of ageing stock can squeeze cash flow even though the facility looks unused.

Prestige, specialist and classic cars usually take longer to sell, so some lenders offer longer periods before curtailment starts for that type of stock. It is worth comparing these terms as closely as the interest rate.

Stock audits and keeping the facility in order

Every stocking lender checks that the vehicles it has funded are where they should be. Audits may be in person, unannounced, or done through an app where you photograph each car and its mileage.

• Repay on sale. Selling a funded car and not repaying it within the agreed time is called selling out of trust. It is the most serious breach of a stocking facility and can lead to the facility being withdrawn.
• Keep cars on site. Vehicles away for preparation, at a body shop or out on a test drive need to be accounted for when the auditor visits.
• Keep records up to date. Lenders often link to your dealer management system, so accurate stock records make audits quicker.

Stocking finance for different dealers

Lenders treat dealers differently depending on what they sell and how quickly it moves.

• Independent used car dealers. The core of the stocking market. Lenders look at your stock turn, average vehicle value and where you buy.
• Franchised dealers. New car stock is usually funded by the manufacturer’s own finance company. An independent facility can sit alongside it for used cars, part exchanges and other brands.
• Car supermarkets and high-volume dealers. Larger limits, often with integration to auction and stock systems, and pricing based on volume.
• Prestige, specialist and classic dealers. Fewer, higher-value cars that take longer to sell. Some lenders cap the value of a single car, so the choice of lender matters.
• Van and light commercial dealers. Stocking works the same way for vans and pick-ups, and some lenders specialise in commercial stock.
• Online and appointment-only dealers. Fundable, but lenders want to know where the cars are stored and how they will be audited.
• New dealers. Some lenders will start a dealer with a smaller limit, based on the owner’s experience in the trade, and increase it once there is a track record. Expect personal guarantees.

How big a stocking facility do you need?

Start with the stock you want to carry, not the biggest limit on offer. Multiply the number of cars you aim to have on the forecourt by their average funded value, then allow some headroom for busy buying periods.

For example, a dealer aiming to carry 30 cars at an average of £14,000 needs around £420,000 of funding, and might ask for a £480,000 limit to allow for buying ahead of the March and September plate changes. A limit far larger than you use can carry fees without earning anything.

Workshop, preparation and showroom equipment

Stocking finance pays for the cars. The equipment that prepares, services and sells them is funded with asset finance over 2 to 7 years, usually on hire purchase or a finance lease. Each group links to our detailed guide where we have one.

Using asset finance for equipment keeps your stocking limit free for cars. A franchised dealer facing a manufacturer’s showroom standards upgrade can often fund the fit-out this way too, although lenders limit how much of a fit-out they will fund where it cannot be removed and resold.

VAT and stocking finance

Most used cars are bought and sold under the VAT margin scheme, where VAT is due only on your margin. Some cars, often ex-business or ex-lease vehicles, are VAT qualifying, so VAT is charged on the full price. Lenders differ in whether they fund the VAT on qualifying cars, which affects how much cash you need when you buy. For workshop equipment on hire purchase you may be able to claim capital allowances, and lease rentals are usually an allowable business expense. Check the VAT and tax treatment with your accountant.

What lenders look for in car dealers

Stocking lenders look at the usual financial documents, plus how well you buy and how fast you sell.

• Your last 2 years of filed accounts, or management accounts and a forecast for newer dealers
• Your last 3 to 6 months of business bank statements
• A current stock list showing vehicles, purchase prices and how long each has been in stock
• Details of any existing stocking facilities, and how you currently fund stock
• Details of your premises and where stock is kept, plus photo ID and address history for each director, member or partner

Most stocking facilities also need personal guarantees from the directors. Lenders will want to understand your trade experience, especially for a newer business.

Stocking finance for car dealers FAQs

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