Definition Of Floor Plan Financing

The dealer then receives payment hopefully including a profit and remits the balance to.

Definition of floor plan financing.

Simply it is a way for an auto dealer to use a lender s funds to finance the cars and until each of them is sold the lender holds title to the cars. 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. Floor plan financing is a revolving line of credit that allows the borrower to obtain financing for retail goods. A scale diagram of a room or building drawn as if seen from above.

The loans are often made with a one year term and based on an aggregate budget. 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 planning is commonly used in new and used car dealerships. For example a dealer might be able to borrow 10 million over the year to purchase 300.

Retail floor planning also referred to as floorplanning or inventory financing is a type of short term loan used by retailers to purchase high cost inventory such as automobiles these loans are often secured by the inventory purchased as collateral. Floor plan lenders include local and regional banks large national banks and financing companies owned by the manufacturing companies like toyota financial or ford credit. These loans are made against a specific piece of collateral i e. Contrary to common perceptions most car dealers do not pay cash for the.

Like any other financing facility the line must fit the financing needs of the borrower with some restraints to avoid excessive leveraging or over extension. However not all inventory finance companies offer retail and dealership wholesale financing options. How does floor plan financing work specifically to benefit auto dealers. Floor plan finance companies are uniquely attuned to the needs of auto dealers.

What you don t realize is that like most new car dealers a floor plan was used to finance the cars. 3 amount of the line. Floor plan finance options are popular within the automotive industry. Floor plan synonyms floor plan pronunciation floor plan translation english dictionary definition of floor plan.

When each piece of collateral is sold by the dealer the. For example automobile dealerships utilize floor plan financing to run their businesses. Floor planning is a form of financing for large ticket items displayed on showroom floors. A good rule of thumb is new car floor plans that allow for 90 days of inventory and used floor plan lines that allow for 60 days of inventory.