Definition Of Floor Plan Financing

Floor plan finance options are popular within the automotive industry.

Definition of floor plan financing.

Impact of floor plan lending activities on a bank s risk profile and financial condition. For example a dealer might be able to borrow 10 million over the year to purchase 300. 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. A scale diagram of a room or building drawn as if seen from above.

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. Floor plan synonyms floor plan pronunciation floor plan translation english dictionary definition of floor plan. Floor planning is commonly used in new and used car dealerships. 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. However not all inventory finance companies offer retail and dealership wholesale financing options. 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. Floor planning is a form of financing for large ticket items displayed on showroom floors.

Floor plan lending is a form of inventory financing for a dealer of consumer or commercial goods in which each loan advance is made against a specific piece of 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. An auto rv manufactured home etc. How does floor plan financing work specifically to benefit auto dealers.

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. When each piece of collateral is sold by the dealer the. 3 amount of the line. The dealer then receives payment hopefully including a profit and remits the balance to.

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. Floor plan financing is a revolving line of credit that allows the borrower to obtain financing for retail goods. Floor plan finance companies are uniquely attuned to the needs of auto dealers.