Definition Of Floor Plan Financing

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

Definition of floor plan financing.

For example automobile dealerships utilize floor plan financing to run their businesses. An auto rv manufactured home etc. How does floor plan financing work specifically to benefit auto dealers. However not all inventory finance companies offer retail and dealership wholesale financing options.

These loans are made against a specific piece of collateral i e. What you don t realize is that like most new car dealers a floor plan was used to finance the cars. 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. 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 finance options are popular within the automotive industry. 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 financing is a revolving line of credit that allows the borrower to obtain financing for retail goods. 3 amount of the line.

Floor plan finance companies are uniquely attuned to the needs of auto dealers. When each piece of collateral is sold by the dealer the. 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. The loans are often made with a one year term and based on an aggregate budget.

For example a dealer might be able to borrow 10 million over the year to purchase 300. 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 synonyms floor plan pronunciation floor plan translation english dictionary definition of floor plan. 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 planning is a form of financing for large ticket items displayed on showroom floors. Contrary to common perceptions most car dealers do not pay cash for the. 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. A scale diagram of a room or building drawn as if seen from above.