What is block discounting and how does it work?

What is block discounting?

Block discounting is a revolving credit facility primarily for auto dealers. It allows them to raise funds against their future income – in particular, where the dealership is funding hire purchase agreements on vehicles. The bank purchases “blocks” of these hire purchase agreements, while the auto dealers continue to collect and manage the instalment payments by their customers. In the meantime, the bank disburses funds equal to the agreements discounted.

When would I need block discounting?

Block discounting could come in handy if you are providing financing to your customers and need to maintain healthy cashflow to meet your business needs.

Benefits of block discounting

There are several ways block discounting can be beneficial to your business. You’ll enjoy:

• Better cashflow by freeing up funds tied up in hire purchase agreements. This will give you access to more working capital
• Flexibility and convenience as auto dealers can plan their monthly finances with a fixed repayment schedule, while keeping track of their finances.

What DBS Block Discounting can offer you

If you run an auto dealership or credit company and are looking for ways to boost your working capital, it’s worth considering block discounting. This revolving credit facility offered by DBS allows you to borrow up to 90% of the invoice value or valuation – whichever is lower – for up to seven years.This could go a long way in helping your business unlock cash which you can use for growing the company.

How to apply

If you would like to explore block discounting, log on to the DBS website for more information. Applying for block discounting is easy – simply access the DBS’ online loan application and apply under Equipment Financing.