Floor Plan Financining

How does floor plan financing work specifically to benefit auto dealers.

Floor plan financining.

The business of selling used cars successfully is a balancing act. Pulled between consumer buying habits workforce challenges competitors economic trends and other concerns successful independent car dealers want a dependable cost competitive floorplan financing provider also known as floor plan financing. The dealer then receives payment hopefully including a profit and remits the balance to the lender who in turn releases the title to the car to the new purchaser. In many cases floor plan financing is arranged with the financial assistance of a manufacturer s captive lender or the manufacturer itself.

Let s say you make a profit of 3 000 per car sold. Using cash or a bank line of credit to purchase inventory can work for some car dealers but many floor plan financing companies offer a variety of dealer specific benefits. However not all inventory finance companies offer retail and dealership wholesale financing options. Floor plan finance companies are uniquely attuned to the needs of auto dealers.

Loan repayment arrangements under a floor plan loan facility terms are often linked to a pay as sold agreement or according to a specific schedule. Floor planning is a form of financing for large ticket items displayed on showroom floors. If your holding cost per day per unit is 44 63 and your turn time is 60 days you will spend 2677 of your profit holding on to a non selling car. The arrangement is most commonly used when large assets such as automobiles or household appliances are involved.

For example automobile dealerships utilize floor plan financing to run their businesses. While some lenders are unable to properly serve independent dealers nextgear capital has proudly served the independent dealer market for over ten years our floor plan financing options allow dealers to finance nearly any. Floor plan finance options are popular within the automotive industry.