Floor Plan Interest Assistance

Floor plan interest assistance on new vehicles purchased during month.

Floor plan interest assistance. Although we can provide no assurance as to the amount of future floor plan assistance it is our expectation based on historical data that an increase in prevailing interest rates would result. 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. But because inventories are so immense the car business is very sensitive to both floor plan interest rates and the tax treatment of interest expenses. Ford receivable floor plan allowance.

Let s say a dealer makes a profit of 3000 per car sold. As an aside the floor plan expense carve out in the law was very valuable because floor plan interest is not netted with floor plan assistance received from the factory for tax purposes. These floor plan finance formulas incorporated with your turn time can help to make or break your dealership s profitability. The loans are also inspected periodically by lenders by checking the inventory of all collateralized vehicles.

Retailers use a short term loan to purchase inventory items and the loan is repaid as inventory is sold. Floor planning is a type of inventory financing for large ticket retail items. As an aside the floor plan expense carve out in the law was very valuable because floor plan interest is not netted with floor plan assistance received from the factory for tax purposes. So how does floor plan financing work.

These floor plan finance formulas incorporated with a dealer s turn time can help to make or break a dealership s profitability. Had the limitation applied to floor plan interest it is possible a dealership could break even or lose money for the year yet still owe significant tax. Let s say you make a profit of 3 000 per car sold. The money borrowed from the bank collects interest and one has the choice to either make a minimum payment or pay off the balance in full when the bill is due.

Is modifying the assistance it gives dealers for loans to finance new vehicle inventory to help offset rising interest rates. Had the limitation applied to floor plan interest it is possible a dealership could break even or lose money for the year yet still owe significant tax. Ford receivable floor plan allowance hdtc 1230. Much like a credit card a floor plan financing company extends a line of credit to a car dealer.