Floor Planning Finance How Does It Work

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Floor planning finance how does it work. So they work with lenders who provide floor plan lines of credit for those vehicles financing through a lender that is secured by each vehicle and its vin number. 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. 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. The arrangement is most commonly used when large assets such as automobiles or household appliances are involved.
An auto rv manufactured home etc. These floor plan finance formulas incorporated with your turn time can help to make or break your dealership s profitability. 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.
What you don t realize is that like most new car dealers a floor plan was used to finance the cars. How does floor plan financing work specifically to benefit auto dealers. Floor plan finance options are popular within the automotive industry. 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 financing is a revolving line of credit that allows the borrower to obtain financing for retail goods. However not all inventory finance companies offer retail and dealership wholesale financing options. 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. Dealer floor plan financing frequently asked questions for borrowers and lenders what is floor plan financing.
Floor planning is a method of financing inventory purchases where a lender pays for assets that have been ordered by a distributor or retailer and is paid back from the proceeds from the sale of these items. Let s say you make a profit of 3 000 per car sold. Floor planning is commonly used in new and used car dealerships. Floor plan finance companies are uniquely attuned to the needs of auto dealers.
The dealer then receives payment hopefully including a profit and remits the balance to. How does the stock market trading floor work. Floor planning is a flexible way to finance inventory for a dealership but in the cyclical industry of automobiles it must be managed responsibly so that the financing cost burden does not.