Funding Societies launches first collateralised P2P investment in Malaysia
By Digital News Asia August 29, 2019
- Backed by additional security which is the ownership claim on the financed used cars
- Works with independent car bidding platforms including MyTukar, MUV and CarlistBid
FUNDING Societies Malaysia, a Peer-to-Peer (P2P) financing platform, has launched Dealer Financing, for the purchase of used cars by identified used car dealers.
Dealer Financing is not only the first P2P dealer financing product, but it is also the first collateralised P2P investment in Malaysia, whereby it is backed by additional security which is the ownership claim on the financed used cars.
The product’s introduction is in line with the financing platform’s objective to provide different products that can cater to different risk appetites. In essence, Dealer Financing caters to the more risk-averse investors, who prefer shorter-term investments with collateral as a means to diversify their investment portfolio.
Simultaneously, the product also aims to offer additional financing opportunities to the underserved small and medium-sized enterprises (SMEs), particularly from the used car industry, subsequently providing short-term financing to used car dealers in helping them grow their businesses.
Funding Societies Malaysia co-founder and chief executive officer Wong Kah Meng, said, “As an alternative financing platform that serves diverse segments of clients and partners, we continuously gather feedback from our fellow SME clients and investors on how they want to grow further with us.
“Among this feedback is investors’ preference for shorter-term financing that provides lower risk, and this is part of the reason we are launching Dealer Financing, the country’s first collateralised P2P investment.”
“A major difference of Dealer Financing compared to our other financing products is that it is backed by additional security, and that is the ownership claim on the financed used cars. Accordingly, this ownership claim acts as a safeguard to prevent the used car dealers from transferring the ownership or selling the cars to any third party prior to full repayment to the investors. This additional security would then further encourage repayment from the issuers,” added Wong.
For the new product offering, Funding Societies is also working with independent car bidding platforms including MyTukar, MUV and CarlistBid, and has since disbursed financing to more than 100 used car dealers.
The partnered car bidding platforms will inspect the condition and verify the value and identity of the used cars before putting them up for bidding. By onboarding used car dealers with proven track records based on their repayment capabilities, business history and performance, Funding Societies is able to further control the risk for its investors.
Around 40% of the one million car units sold in 2018 were used cars, which points to a relatively high demand. However, used car dealers often face issues when it comes to obtaining capital to expand their business as traditional financing avenues do not usually cater to used car dealers that are sole proprietors.
This is where P2P financing fits right into the picture by providing financing opportunities for used car dealers to increase their cash flow.