MattFow

How to obtain stocking funding

85 posts in this topic

30 minutes ago, EPV said:

This is the problem with conversations like these. Naturally most of us want to keep our affairs to ourselves. Especially on a public forum. When someone tells you something you find hard to believe or someone says you shouldn’t listen to the bullshit other traders spout off then I assume the reason why they find it hard to believe is they can’t do said thing for themselves. That doesn’t mean it can’t be done and isn’t being done. It just means they can’t. 

It’s worthless talking about this because even if I was, or Nik were happy to disclose on a public forum our margins, people who have made up their minds that it doesn’t happen, or can’t be done, wouldn’t believe it anyway. 

If you’re happy with what you’re pulling from cars then that’s all that matters. But if you’re not happy, or if you’re the type to be jealous of others (not saying you are mate just making a point) then instead of calling other people bullshitters or not believing them, you shouldn’t tell others it can’t be done. 

“Those that can’t do it should not get in the way of those doing it”

 

28 minutes ago, Nick M.K. said:

Please re-read the last three words of my post. 

I don't travel to buy privately. People either travel to me to sell or more often the car simply comes in part exchange. Buying this way is far less braver than the auctions. 

Fuck me you pair, I’m giving the OP advice on going from a doorstepper to a pitch, something I’ve done recently over the past 10 years and have experience in. It’s my opinion that throwing this idea of lifting £1500 clean out every deal from a pitch is unreasonable on the type of cars he will need to buy with unit stocking.

Your not going to get enough stocking off the back of no trading history to fit the type of business NICKMK has for example, therefore your not going to lift these outstanding profits on every deal. I’m delighted that you pair make a fortune from all your cars, people appear at your place to sell their cars for half cap clean. If your trying to tell OP that by moving and taking on unit stocking will achieve this then you are leading him up the garden path. 

imo of course. Jealous opinion too. 

 

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You need attention to detail. Lots if it. 

1) No one said EVERY deal

2) No one said PITCH (only TV did, all the OP said was "lot")

3) No one said "half of Cap Clean". I said "under cap below"

4) You can get A LOT of stocking with VERY LITTLE trading history. 

5) No one said "a fortune". I personally think I can be earning more.

6) You can tell me that I don't know what I am talking about. I'll take it on board.

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6 minutes ago, NickGCS said:

 

Fuck me you pair, I’m giving the OP advice on going from a doorstepper to a pitch, something I’ve done recently over the past 10 years and have experience in. It’s my opinion that throwing this idea of lifting £1500 clean out every deal from a pitch is unreasonable on the type of cars he will need to buy with unit stocking.

Your not going to get enough stocking off the back of no trading history to fit the type of business NICKMK has for example, therefore your not going to lift these outstanding profits on every deal. I’m delighted that you pair make a fortune from all your cars, people appear at your place to sell their cars for half cap clean. If your trying to tell OP that by moving and taking on unit stocking will achieve this then you are leading him up the garden path. 

imo of course. Jealous opinion too. 

 

You did give some advice to the OP, which is first hand experience. You did also then say “£1500, I assume that figure is gross” which sparked off a debate about that which went a bit off topic. 

My response was just stating that it’s pointless having conversations about margins because people either will believe you or won’t, based on their own experience. I personally have no interest in trying to convince people of things they can’t be convinced of. That’s all. 

I am sure your advice to the OP would be invaluable given you’ve actually made the change in premises AND held a stock fund mate. I wasn’t trying to offend you. 

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1. Actually it was plot - attention to detail

2. half cap clean was sarcasm- maybe over your head a litte

3. same applies to fortune references

 

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I meant to type Plot, my keyboard let me down this time and I don't have an EDIT button. 

I love sarcasm, especially in this forum. I also love fortune references. If someone says "I ain't greedy" I ask them "Have been to see your doctor?"

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8 minutes ago, Nick M.K. said:

You need attention to detail. Lots if it. 

1) No one said EVERY deal

2) No one said PITCH (only TV did, all the OP said was "lot")

3) No one said "half of Cap Clean". I said "under cap below"

4) You can get A LOT of stocking with VERY LITTLE trading history. 

5) No one said "a fortune". I personally think I can be earning more.

6) You can tell me that I don't know what I am talking about. I'll take it on board.

I know see that Matt did say it was a prominent pitch that he was considering.

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I went back, re-read it again and I now see it a few posts down from the initial "Plot". Depending on what his setup will be on that "plot" or "pitch" I either stand by absolutely everything I said above or retract absolutely everything I said as never having run a pitch makes me unqualified to give advice to the OP. 

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3 minutes ago, Nick M.K. said:

I went back, re-read it again and I now see it a few posts down from the initial "Plot". Depending on what his setup will be on that "plot" or "pitch" I either stand by absolutely everything I said above or retract absolutely everything I said as never having run a pitch makes me unqualified to give advice to the OP. 

Looks like you didn’t pay much attention to the detail. 

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2 minutes ago, NickGCS said:

Looks like you didn’t pay much attention to the detail. 

Absolutely, I didn't. And it was crucial here. 

Apologies to the OP, please disregard everything I typed above, do what the pitch guys are suggesting. I am sure you will do well. 

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33 minutes ago, Nick M.K. said:

Absolutely, I didn't. And it was crucial here. 

Apologies to the OP, please disregard everything I typed above, do what the pitch guys are suggesting. I am sure you will do well. 

It is easy to miss details from the topic.I think I must be the biggest culprit aswell as going off on a tangent.Its all well intended good stuff and banter from all of us ....

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8 hours ago, Nick M.K. said:

I also love fortune references. If someone says "I ain't greedy" I ask them "Have been to see your doctor?"

Love this Nick! 

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There  are a lot of big businesses making a lot of money using stock funding. 

There are a lot of people who can't manage their own financial affairs correctly who are given stocking facilities and continue to mismanage their financial affairs. These people arethe ones who say Nextgear randomly debit money from my account. They just dip in and out. Its all nextgears fault when things go wrong. It really isn't.

Be careful, take on less than you need learn the ins and outs and if you sell fast its a good way to assist with some growth. 

Proceed with caution. 

Pitches are digital these days IMO. Things that used to apply still do just a different format. 

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I have just searched NextGear Capital and they appear to be part of Cox Automotive/Manheim.Anyway having never had a stocking plan I would like to be educated as to how much they cost and how they work.NextGear website appears to say they will fund stock for 150 days.I read somewhere else that the BCA equivalent charge 10%.Surely that cannot be right,so can someone tell me how much the money costs.Also,do you have to sign a personal guarantee or are there any other downsides to watch out for.

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1 minute ago, trade vet said:

I have just searched NextGear Capital and they appear to be part of Cox Automotive/Manheim.Anyway having never had a stocking plan I would like to be educated as to how much they cost and how they work.NextGear website appears to say they will fund stock for 150 days.I read somewhere else that the BCA equivalent charge 10%.Surely that cannot be right,so can someone tell me how much the money costs.Also,do you have to sign a personal guarantee or are there any other downsides to watch out for.

It’s a straightforward enough pricing structure but too much to list out in here. Simply put it will cost you around £150 to buy and sell a £7k retail cost car within about 45 days. Personal guarantees required for businesses without much trading history. Understandably i think. 

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I think the op heading should be how to manage a stocking plan loan not how to get one, anyone can borrow money making it work for you is the trick. 

Nextgear are a very good company to deal with, they tailor there packages to suit each dealer, so any quotes you see on line might not be relevant to your business, best suggestion would be to ring them and get a rep out.

 

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1 hour ago, EPV said:

It’s a straightforward enough pricing structure but too much to list out in here. Simply put it will cost you around £150 to buy and sell a £7k retail cost car within about 45 days. Personal guarantees required for businesses without much trading history. Understandably i think. 

Thank you James.So It is well over 10%.Sounds very expensive money to me,when you consider it is hard to net 1% when investing these days.I can see it working if you are a small operation with 10 cars and big mark ups.I can also see why these car supermarkets charge an admin fee.Surely if you have ‘belt and braces security’ you can buy money for more than half the price......Very interesting.

 

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3 minutes ago, trade vet said:

Thank you James.So It is well over 10%.Sounds very expensive money to me,when you consider it is hard to net 1% when investing these days.I can see it working if you are a small operation with 10 cars and big mark ups.I can also see why these car supermarkets charge an admin fee.Surely if you have ‘belt and braces security’ you can buy money for more than half the price......Very interesting.

 

Yes I agree. I remember having a meeting with a Nextgear rep about a year or so ago, the price per car is just the beginning.They have an annual fee and an audit fee (monthly) if you are using less than 30% (I think) of your agreement. The fees are just non-stop. Great if the turnover is quick but too dangerous for me. A simple business loan is the way forward imo

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9 minutes ago, trade vet said:

Thank you James.So It is well over 10%.Sounds very expensive money to me,when you consider it is hard to net 1% when investing these days.I can see it working if you are a small operation with 10 cars and big mark ups.I can also see why these car supermarkets charge an admin fee.Surely if you have ‘belt and braces security’ you can buy money for more than half the price......Very interesting.

 

It's expensive if you have access to cheap money. I don't know of any banks that will loan me that sort of unsecured debt. So it's not expensive,

I look at it this way;

I buy and sell a car via a stock fund, lets say I nett £1100 and it costs me £150 on NG fees and interest to nett that. So I have made £950 profit. If I can do that on 6 cars I have made £5700 profit.

If I don't buy and sell a car via a stock fund, as there is no other way for me to loan that sort of money (I have access to low level amounts on credit cards and IWOCO have also given me a small amount) then my profit is £0.

It's not expensive at all.

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I couldn’t understand where TV was coming up with the 10% cost bit from, but from your reply James I guess he’s saying 10 % of your profits -which to me seems cheap. 

You’re right. The banks can barely lend a pen let alone any money to the car trade. 

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3 minutes ago, EPV said:

It's expensive if you have access to cheap money. I don't know of any banks that will loan me that sort of unsecured debt. So it's not expensive,

I look at it this way;

I buy and sell a car via a stock fund, lets say I nett £1100 and it costs me £150 on NG fees and interest to nett that. So I have made £950 profit. If I can do that on 6 cars I have made £5700 profit.

If I don't buy and sell a car via a stock fund, as there is no other way for me to loan that sort of money (I have access to low level amounts on credit cards and IWOCO have also given me a small amount) then my profit is £0.

It's not expensive at all.

Yes James,I can see it will work for you.However if you had a 60 car pitch doing 8 to 10 per week and an average stock turn of 35 days ....the mind boggles.No wonder how some traders get in a mess.

2 minutes ago, NOACROSS said:

I couldn’t understand where TV was coming up with the 10% cost bit from, but from your reply James I guess he’s saying 10 % of your profits -which to me seems cheap. 

You’re right. The banks can barely lend a pen let alone any money to the car trade. 

No,I had been reading some old post on here and some guy was saying his BCA stocking money was costing 10%.However this Next Gear money appears to cost a lot more.If you have a track record,good security and 2 years accounts,I would have thought the banks would be interested.However nothing surprises me anymore with the banks.

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37 minutes ago, trade vet said:

Yes James,I can see it will work for you.However if you had a 60 car pitch doing 8 to 10 per week and an average stock turn of 35 days ....the mind boggles.No wonder how some traders get in a mess.

No,I had been reading some old post on here and some guy was saying his BCA stocking money was costing 10%.However this Next Gear money appears to cost a lot more.If you have a track record,good security and 2 years accounts,I would have thought the banks would be interested.However nothing surprises me anymore with the banks.

If you had managed to get yourself to a 60 car pitch doing 10 a week I don't see how you would need a fund. If you had managed to get yourself to a 60 car pitch doing 8-10 a week WITH a stock fund then you wouldn't need advice off anyone else that's for sure.

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Ten a week!  Good old days! ;0)

Playing Devil's Advocate: in the above example, If you'd sold a load and waiting for the funds, plus another load in prep, then that's a load of dough outstanding and perhaps you then get offered some more you don't want to miss or there's some bargains at the auctions (yeah it happens)- then I think a fund may be the answer to your prayers in that case.  Especially with a big vat quarter going up, staffing costs etc etc.

Chunky Px's and so on.

 

 

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Friend of ours went with Next Gear stocking ,but this comment can apply to all stocking plans I would imagine .

He said it was a drug and it got him in trouble . 

A guy from a Finance company also told me  its a very dangerous practice too and he saw lots of failures because of it .

Its how you manage it that's the secret , too many potentially good  guys have gone because it got out of control and left them broke or close to it . 

The guy above told me he lost direction of everything and had to borrow from the bank to sort it , two years of grief , and a large loan later hes still deep over his head . 

All the companies put it over very well  but the hidden costs are quite high when its looked at in detail I've been told 

Has its uses i suppose but what happens when interest rates go UP is that going to be profits DOWN time or break even , or god help a loss situation . Is stock funding popular now because of low interest rates and will it change the outlook when rates go North , 

 

Whatever you do keep a very tight reign on the finances if choosing borrowed money when rates are low . Cant see it staying this way forever and then the Shite hits the fan .

 

Little and often I was taught , slower but safer and loads more lucrative long term , suited me , but we are all different .

Just stay safe and in control would be my thoughts .

Trouble is the failures will never be posted on a forum will they , only the good news , but the good news guys are probably very good at remaining cool calm and collected with a 100 k of some one else's money and very good at money management , the failed businesses wont say a word about their experiences , cant blame them mind .

 

Edited by David Horgan

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4 hours ago, trade vet said:

I would like to be educated as to how much they cost and how they work

While I am no longer with NextGear I can contribute with my current provider's numbers. Close Brothers provides my stocking* at a fixed rate of interest of 3.5% per year. In addition to that I pay £20 "bonnet fee" for every car I add to the plan so if I only have a car on stocking for two-three days (it happens) they make something out of it. 

The example below is for a 2015 Golf that came in p/x. They will fund auction purchases, private purchases, trade purchases, any source. Close always fund NO MORE than 70% of the car cost for up to 90 days for cars up 10 years old up to 100K miles. 

The Golf was bought for £8950 of which Close are funding £6160. From 26 Nov until today that car has cost me £45.82 in funding charges. They don't require any capital repayments before the 90 days expire. When sold there are no other fees or anything else to pay. 

*In exchange for providing that stocking at that price (which I personally consider very low even compared to my business overdraft) Close Brothers want three times the amount of the stocking facility in annual finance business so £150K in my case. They pay me a commission of course. 

Screenshot 2019-01-14 at 16.15.49

 

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31 minutes ago, Nick M.K. said:

While I am no longer with NextGear I can contribute with my current provider's numbers. Close Brothers provides my stocking* at a fixed rate of interest of 3.5% per year. In addition to that I pay £20 "bonnet fee" for every car I add to the plan so if I only have a car on stocking for two-three days (it happens) they make something out of it. 

The example below is for a 2015 Golf that came in p/x. They will fund auction purchases, private purchases, trade purchases, any source. Close always fund NO MORE than 70% of the car cost for up to 90 days for cars up 10 years old up to 100K miles. 

The Golf was bought for £8950 of which Close are funding £6160. From 26 Nov until today that car has cost me £45.82 in funding charges. They don't require any capital repayments before the 90 days expire. When sold there are no other fees or anything else to pay. 

*In exchange for providing that stocking at that price (which I personally consider very low even compared to my business overdraft) Close Brothers want three times the amount of the stocking facility in annual finance business so £150K in my case. They pay me a commission of course. 

Screenshot 2019-01-14 at 16.15.49

 

Thank you Nick.Now that looks like a better deal to me and £150k on finance Is manageable.I like Close,we did use them.But again if you were financing 60 cars the bill would mount up and they would probably want £1m on finance which cannot be easy these days.

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