A specialized financial instrument facilitates the acquisition of inventory for dealerships. This instrument allows businesses to borrow funds to purchase vehicles or other merchandise, which are then held as collateral. Repayment occurs as the inventory is sold. An analytical tool assists in determining the costs associated with this type of financing, including interest, fees, and potential profit margins based on projected sales.
This financing method is critical for maintaining a diverse product range, attracting customers, and boosting sales volume. Its use enables dealerships to stock a wider variety of models and trims without tying up excessive working capital. Historically, this approach has been a cornerstone of the automotive and related industries, allowing dealerships to operate effectively and competitively.
