Auto Dealer Floor Plan Line Of Credit

Let s say you make a profit of 3 000 per car sold.

Auto dealer floor plan line of credit.

These loans are made against a specific piece of collateral i e. For example a dealer might be able to borrow 10 million over the year to purchase 300 new cars. Depending on a dealer s contracted terms an auto dealer line of credit allows them to make a minimum payment after a contractually determined number of days. For example automobile dealerships utilize floor plan financing to run their businesses.

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 planning is commonly used in new and used car dealerships. These floor plan finance formulas incorporated with your turn time can help to make or break your dealership s profitability. So lets assume that you currently have a floor plan line of credit out to a ford dealership that allows for 100 advances on the cost of new vehicles and requires curtailments of 10 per month for five months starting in october introduction of next year s models and then the borrower has the option to move the remaining outstanding to the used floor plan line of credit or payoff the balance.

If your holding cost per day per unit is 44 63 and your turn time is 60 days you will spend 2677 of your profit holding on to a non selling car. We can even floor your trade in vehicles and purchases from other independent auctions as well as vehicles purchased from other dealers and new car dealerships. Floor planning is a form of financing for large ticket items displayed on showroom floors. The loans are often made with a one year term and based on an aggregate budget.

Dealer floor plan financing frequently asked questions for borrowers and lenders what is floor plan financing. 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. Afs is accepted at all manheim and adesa auto auctions across the country. Floor plan financing is a revolving line of credit that allows the borrower to obtain financing for retail goods.

In addition to freeing up the cash a dealer has on hand other floor plan financing benefits can include extra flexibility in terms of paying off a particular piece of inventory payment extensions and credit increases if. An auto rv manufactured home etc. The additional flexibility of the minimum payment means that a dealer s dollars aren t depreciating while a car sits on the lot.