Dealer Financing (MBDF)

Understand Dealer Financing better!

Shaun avatar
Written by Shaun
Updated over a week ago

1. What is Dealer Financing?

Dealer financing is a new type of SME financing offered by Funding Societies. This collateralized financing is taken by Malaysian Car Dealers to finance the purchase of motor vehicles.

2. How does it work?

Car dealers will seek financing from Funding Societies to purchase vehicles as inventory.

Funding Societies will provide financing to car dealers, which is funded from our investors. At the end of the tenure or earlier, the car dealers will make a payment of principal + returns back to the investors involved.

3. What is the collateral?

Ownership claim on the motor vehicle purchased by the car dealers. In the event of a default, the financier has the right to repossess the motor vehicle.

4. What is the average returns rate for this type of financing?

8 - 18% per annum.

5. What is the payment structure?

Bullet payment , where principal and returns will be paid at the end of the financing tenure. The Issuer will have the option for early payment , with no early payment charges. The returns charged is calculated per day.

You’ve invested RM1,000 into Dealer Financing (12% returns p.a.) for a tenure of 90 days.

6. Is there compensation for late payment charged?

0.1% per day on the outstanding amount after a 7-day grace period.

7. What is the tenure?

Up to 120 Days.

8. What is the service fee?

The Service Fee charged is 30% on the returns earned, the higher service fees compared to other products is due to the higher operational requirements and costs involved for this product, given its collateralized nature.

9. What happens in a case of default?

In the event of default, there will be recovery efforts made, such as restructuring the Note or repossessing the motor vehicle. After the motor vehicle is repossessed, it will be sold and the proceeds will then be distributed back to our investors.

10. What are the risks involved?

Default Risk - In the event of a default, there’s a potential for your principal amount to be held longer or potential for loss of principal. However, as this financing is collateralized, potential principal loss could be lessened from selling the motor vehicle.

11. What is the minimum investment amount?

Minimum investment amount: RM 100

Did this answer your question?