Definition Of Floor Plan Financing

When each piece of collateral is sold by the dealer the.

Definition of floor plan financing. The dealer then receives payment hopefully including a profit and remits the balance to. An auto rv manufactured home etc. 3 amount of the line. 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.

Floor plan financing is a revolving line of credit that allows the borrower to obtain financing for retail goods. Contrary to common perceptions most car dealers do not pay cash for the. 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.

Floor planning is commonly used in new and used car dealerships. Impact of floor plan lending activities on a bank s risk profile and financial condition. 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. 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.

Floor plan finance companies are uniquely attuned to the needs of auto dealers. How does floor plan financing work specifically to benefit auto dealers. A scale diagram of a room or building drawn as if seen from above. 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 synonyms floor plan pronunciation floor plan translation english dictionary definition of floor plan. What you don t realize is that like most new car dealers a floor plan was used to finance the cars. Floor planning is a form of financing for large ticket items displayed on showroom floors. For example automobile dealerships utilize floor plan financing to run their businesses.

The loans are often made with a one year term and based on an aggregate budget. 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. 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. For example a dealer might be able to borrow 10 million over the year to purchase 300.