Floor plan financing is a revolving line of credit that allows the borrower to obtain financing for retail goods.
Definition of floor plan financing.
Floor plan finance options are popular within the automotive industry.
Contrary to common perceptions most car dealers do not pay cash for the.
For example automobile dealerships utilize floor plan financing to run their businesses.
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.
An auto rv manufactured home etc.
3 amount of the line.
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.
How does floor plan financing work specifically to benefit auto dealers.
The loans are often made with a one year term and based on an aggregate budget.
Floor planning is commonly used in new and used car dealerships.
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.
These loans are made against a specific piece of collateral i e.
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 finance companies are uniquely attuned to the needs of auto dealers.
When each piece of collateral is sold by the dealer the.
The dealer then receives payment hopefully including a profit and remits the balance to.
Floor plan synonyms floor plan pronunciation floor plan translation english dictionary definition of floor plan.
For example a dealer might be able to borrow 10 million over the year to purchase 300.
Impact of floor plan lending activities on a bank s risk profile and financial condition.
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.
A scale diagram of a room or building drawn as if seen from above.
What you don t realize is that like most new car dealers a floor plan was used to finance the cars.
