Finance Malaysia Blogspot: [Funding Societies] First Collateralized P2P Investment in Malaysia

Funding Societies Malaysia, the first and largest Peer-to-Peer (P2P) financing platform in the country, has launched Dealer Financing, the latest addition to its array of investment products, 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 collateralized P2P investment in Malaysia, whereby it is backed by additional security which is the ownership claim on the financed used cars.

It's good for Dealers. Can tell me more?

And, what's in it for Investors?

In essence, Dealer Financing caters to the more risk-averse investors, who prefer shorter-term investments with collateral as a means for investors to diversify their investment portfolio. Simultaneously, the product also aims to offer additional financing opportunity for the underserved small and medium-sized enterprises (SMEs) in the country, particularly from the used car industry, subsequently providing short term financing to used car dealers in helping them grow their businesses.

Wong Kah Meng, co-founder and Chief Executive Officer of Funding Societies Malaysia, said, “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.”

Wong Kah Meng, co-founder and Chief Executive Officer of Funding Societies Malaysia

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 on-boarding 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.

Since introducing the new product, Funding Societies has successfully given out close to RM20 million disbursement across 1,000 notes as of August 2019. Dealer financing investors stand to gain a net return of more than 8% per annum before taxes and defaults, while the minimum investment amount is as low as RM100.